The Company timely filed its notice of appeal, taking the position that the Court's Order (the “Order”) is final and appealable, and erroneous. Following the Company’s notice of appeal, the Company negotiated a stipulation with the State and the receiver which afforded it significant concessions. Those concessions included: (a) an agreed recognition of the Company as a secured lienholder with a priority claim, (b) an accelerated time frame for the (i) allocation by the receiver of collected funds between pre- and post- receivership periods, and (ii) disbursement to the Company of pre-receivership funds collected, and (c) an agreement by the State that it would forego its right to seek recoupment of pre-receivership funds as reimbursement for post-receivership advances. In exchange for these concessions (among others), the Company withdrew its appeal.
As of the date of this release, all of the residents of the four facilities have been relocated, the receiver has surrendered possession of three of the facilities to the Company, and the receiver’s surrender of possession to the Company of the one remaining facility will take place no later than November 1, 2011. The Company is actively marketing the facilities for sale and/or lease (for purposes other than the operation of skilled nursing care).
As a result of the Court’s Order, the Company recorded an impairment charge of $24.4 million during the three-month period ended March 31, 2011, in accordance with US Generally Accepted Accounting Principles, to reduce the carrying values of the Connecticut facilities to their fair values. While this impairment charge reduced first quarter and year-to-date net income, the closure of the facilities does not impact the Company’s adjusted FFO guidance, which is discussed below.
FC/SCH Facilities – On June 15, 2011, the Company executed an Agreement To Enter Into Master Lease And Restructure Certain Obligations (“MTA”) with Genesis Healthcare, LLC (“Genesis”) and FC/SCH Partners, LLC and FC Properties WV, LLC (previously referred to as “Formation” and hereafter “FC/SCH”) related to the eleven facilities currently leased by FC/SCH. Among other things, the MTA provides at the closing:1. a subsidiary of Genesis will enter into a new long-term master lease providing for a twelve-year initial term;2. Genesis will deliver a guaranty of the new master lease;3. the restructuring of certain indebtedness of FC/SCH to Omega, including, the guaranty of Genesis to repay such indebtedness as restructured; and4. the release of certain other obligations of FC/SCH.
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