QCP Enters into Definitive Agreements with ProMedica and Welltower
BETHESDA, MD–Quality Care Properties, Inc. (NYSE: QCP) (“QCP”) announced that it has entered into an agreement with ProMedica Health System, Inc. (“ProMedica”), under which ProMedica will assume the rights and obligations of QCP pursuant to the original plan sponsor agreement between QCP and HCR ManorCare Inc. (“HCR ManorCare”) entered into on March 2, 2018. As a result, ProMedica will acquire HCR ManorCare at the completion of HCR ManorCare’s Chapter 11 bankruptcy process.
Separately, QCP entered into a definitive agreement to be acquired by Welltower Inc. (NYSE: WELL) (“Welltower”) for $20.75 per share in an all-cash transaction that would close concurrently with the closing of the QCP and ProMedica transaction. The per share acquisition price represents an approximate 64.7% premium to the closing price of QCP common stock on March 1, 2018, the last day of trading prior to QCP’s announcement that it had entered into the original plan sponsor agreement to acquire HCR ManorCare, as well as an approximate 17.3% premium to the 60-day volume weighted average price ended April 24, 2018. The QCP Board of Directors has unanimously determined that the transaction is in the best interests of QCP and its shareholders, and will recommend that QCP shareholders approve the transaction.
In addition, ProMedica and Welltower announced a strategic joint venture agreement to facilitate these transactions.
Mark Ordan, QCP’s CEO, said, “We are pleased to reach these agreements with ProMedica and Welltower, which provide QCP shareholders with strong, certain and immediate value and position the great team at HCR ManorCare to continue providing high quality care to patients and their families. Since our spin 17 months ago, we have worked through a difficult situation with our principal tenant and navigated industry headwinds that pressured our EBITDA, while under a constraining financing umbrella. Our Board carefully evaluated our standalone prospects and options going forward and determined that this transaction is the best path forward for all of our stakeholders in light of QCP’s risks and opportunities. Through these agreements, we have found a unique owner for our skilled nursing and memory care/assisted living facilities with a relatively low cost of capital, an enormous and flexible balance sheet, a large CAPEX commitment to our assets and a vision of long-term value, beyond what QCP could likely deliver on a standalone and risk adjusted basis.”
Ordan continued, “Ensuring the continuation of the highest-quality patient care has always been among our top priorities. We believe the intended capital infusion by ProMedica and Welltower will benefit the well-being of many thousands of patients, residents and employees of HCR ManorCare.”
QCP will receive a reverse termination fee of $250 million if ProMedica fails to acquire HCR ManorCare in the bankruptcy proceeding, and QCP will pay Welltower a termination fee of $19.8 million (or $59.5 million, in certain circumstances) if QCP terminates the agreement to accept a superior proposal, in each case subject to the provisions of the agreement.
The ProMedica transaction is subject to approval by the U.S. Bankruptcy Court overseeing HCR ManorCare’s Chapter 11 case and other customary closing conditions. The Welltower transaction is subject to approval by QCP shareholders and other customary closing conditions. Each transaction is also, for all practical purposes, cross-conditioned on the occurrence of the other.
The transactions are not subject to a financing condition and are expected to close during the third quarter of 2018.