Toledo’s HCR ManorCare secures $550M line of credit

July 21--Financially troubled HCR ManorCare Inc., the Toledo-based skilled nursing home and assisted-living operator, said Thursday it has secured a $550 million line of credit from a private equity firm to help it pay off a hefty loan and other financial obligations.

It would seem to have staved off the immediate financial struggles of ManorCare, which was deemed this month in default of its master lease for all of its facilities and faced prospects of being put in receivership or possibly being taken over or forced into bankruptcy.

Julie Beckert, a spokesman for the nation's second-largest manager of nursing homes, rehabilitation centers, memory centers, and assisted-living facilities, confirmed on Thursday that Centerbridge Partners, a $25-billion private equity firm based in New York, agreed to provide the line of credit as of Tuesday.

ManorCare, which has been engaged in a rent showdown with landlord Quality Care Properties Inc., the real estate investment trust that owns the 500-plus facilities that are managed by the Toledo company, has an existing $375 million term loan it intends to resolve with the line of credit.

"The Centerbridge loan will be used to repay the company's existing term loan and outstanding loans," Ms. Beckert said.

She gave no indications whether the credit line will be used to resolve its dispute with Quality Care Properties.

"We remain in discussions with QCP," she said.

Officials of Quality Care and Centerbridge Partners did not respond to Blade requests for comment Thursday.

According to U.S. Securities and Exchange Commission filings this month by Quality Care, ManorCare owes its landlord $79.6 million in rent for July and June. The Toledo company, which employs about 57,000 workers nationwide and 1,700 at its downtown Toledo headquarters and area facilities, paid just $8.2 million, Quality Care said.

Quality Care sent ManorCare a notice indicating it had defaulted on its lease agreement and threatened to put the company in receivership or worse if it did not pay the rent owed by July 14.

There has been no word from either party on whether the rent owed was paid or if an extension was granted. ManorCare, which is owned by private equity firm the Carlyle Group, in Washington, has been negotiating with Quality Care to try to reduce its rent payments.

The Wall Street Journal reported this week that ManorCare's term loan lenders also had threatened to place the term loan in default in order to protect their equity position should the Carlyle Group hand over any equity or control of ManorCare to Quality Care.

If the line of credit is used by ManorCare to repay the term loan, the threat of default by the lenders would be eliminated.

A spokesman for the Carlyle Group said it would not comment on the ongoing situation.

Contact Jon Chavez at [email protected] or 419-724-6128.

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