All of the residents of the four facilities have been relocated and the receiver has surrendered possession of the facilities to the Company. The Company is actively marketing the facilities for sale (for purposes other than the operation of skilled nursing care). During the three-month period ended December 31, 2011, the Company classified these facilities as “assets held for sale” on its consolidated balance sheet.
As a result of the 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.
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 then leased by FC/SCH. Among other things, the MTA provided at the closing:
- a subsidiary of Genesis would enter into a new long-term master lease providing for a twelve-year initial term;
- Genesis would deliver a guaranty of the new master lease;
- the restructuring of certain indebtedness of FC/SCH to Omega, including, the guaranty of Genesis to repay such indebtedness as restructured; and
- the release of certain other obligations of FC/SCH.
The sole condition to the closing of the transactions contemplated by the MTA was the receipt of all necessary healthcare regulatory approvals in Massachusetts, New Hampshire, Rhode Island and West Virginia to the transfer of the operating licenses from FC/SCH to Genesis. Effective January 1, 2012, all regulatory approvals were received (except with respect to the Vermont facilities, which will be added to the new master lease when Vermont regulatory approvals are received) and the Company and a Genesis subsidiary entered into a new twelve-year master lease.
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