ManorCare management “plans to request a waiver from its lenders regarding expected areas of non-compliance with the terms of the credit agreement and to continue good faith discussions with the lessor concerning a long-term restructuring of the master lease.”Carlyle paid $6.3 billion for ManorCare in late 2007. ManorCare sold its real estate for $6.1 billion in 2011, so one might think there would be plenty of cash to pay leases. Not so.
Earlier this month, QCP entered into a forbearance agreement with HCR III Healthcare, LLC and its parent company HCR ManorCare, Inc.The question is what happened to the $6.1 billion. How much did Carlyle siphon off in special dividends and management fees during its ownership of ManorCare?
The Agreement also requires HCR ManorCare to deliver its 2016 audited financial statements and auditor consent to QCP not later than April 10, 2017, which is expected to include a "going concern" exception for HCR ManorCare in the auditor opinion.
ManorCare's promised quality committee fell down on the job, given the company's quality problems. That should have been no surprise if government officials looked at LifeCare Hospitals, another Carlyle Group affiliate.
WSJ reported last week Carlyle hired restructuring advisors for ManorCare. Will bondholders try to claw back Carlyle's massive ManorCare withdrawals?
