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Exhibit 99.1
[Logo of Vencor, Inc. appears here]
CONTACT: Richard A. Schweinhart
Senior Vice President and Chief Financial Officer
(502) 596-7379
Richard A. Lechleiter
Vice President of Finance,
Corporate Controller and Treasurer
(502) 596-7734
Susan E. Moss
Vice President of Corporate Communications
(502) 596-7296
FOR IMMEDIATE RELEASE
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VENCOR FILES SECOND AMENDED PLAN OF REORGANIZATION
INCORPORATING TERMS OF CONSENSUAL ARRANGEMENT WITH VENTAS
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Company intends to seek court approval of disclosure materials on December 6
Louisville, KY (December 1, 2000). Vencor, Inc., (the "Company") today
announced that it has filed its second amended plan of reorganization (the
"Amended Plan") with the United States Bankruptcy Court for the District of
Delaware (the "Court"). The Company intends to seek approval of the disclosure
materials describing the Amended Plan at a hearing before the Court on December
6, 2000. If the disclosure materials are approved by the Court, the Company
intends to begin the process of soliciting approval of the Amended Plan.
The Amended Plan and the related plan documents represent the Company's
best efforts to embody understandings that it has reached with all of its major
creditor constituencies, including the United States government and its major
landlord, Ventas, Inc. (NYSE: VTR). These agreements are extremely complex and
remain subject to further negotiation between the parties that the Company
expects to conclude prior to the hearing on the disclosure materials on December
6. All parties have reserved their right to determine whether or not they will
vote for the Amended Plan and execute the related plan documents pending the
outcome of these final negotiations and the completion of the final
documentation. A summary of certain material provisions of the Amended Plan
affecting Ventas is attached to this release.
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As noted, the Amended Plan also further revises the terms of the settlement
of civil and certain administrative claims with the United States government.
The Amended Plan does not make any other material changes to the previously
filed plan of reorganization.
"From the outset of the reorganization, our goal has been to attain a
sustainable capital structure for Vencor that will be fair to all lenders,
landlords and other creditors and that will enable us to continue to provide
high quality care to those people who cannot take care of themselves," said
Edward L. Kuntz, chairman, chief executive officer and president of Vencor. "By
achieving an agreement with Ventas, the Amended Plan now embodies a consensual
arrangement between all of the major constituencies involved in our
reorganization." Mr. Kuntz added that "With the support of Ventas, the United
States government and our other major creditor constituencies, we intend to
vigorously pursue confirmation of the Amended Plan."
In addition to the factors noted below, the confirmation and consummation
of the Amended Plan are subject to a number of material conditions including,
without limitation, the receipt of the requisite acceptances from various
creditor classes to confirm the Amended Plan and the Court's determination that
the Amended Plan satisfies the statutory requirements for confirmation under the
bankruptcy code. There can be no assurance that the Amended Plan as submitted
will be confirmed or consummated.
Vencor and its subsidiaries filed voluntary petitions for reorganization
under Chapter 11 with the Court on September 13, 1999. Throughout the Chapter 11
process, the Company has maintained normal operations in its nursing centers and
hospitals.
Vencor, Inc. is a national provider of long-term healthcare services
primarily operating nursing centers and hospitals.
Certain statements contained herein, including, but not limited to,
statements containing words such as "anticipate," "believe," "plan," "estimate,"
"expect," "intend," "may" and similar expressions are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are inherently uncertain, and stockholders must
recognize that actual results may differ materially from the Company's
expectations as a result of a variety of factors, including, without limitation,
those discussed below. Such forward-looking statements are based on management's
current expectations and include known and unknown risks, uncertainties and
other factors, many of which the Company is unable to predict or control, that
may cause the Company's actual results or performance to differ materially from
any future results or performance expressed or implied by such forward-looking
statements. These statements involve risks, uncertainties and other factors
detailed from time to time in the Company's filings with the Securities and
Exchange Commission. Factors that may affect the plans or results of the Company
include, without limitation, the ability of the Company to continue as a going
concern; the delays or the inability to complete and/or consummate the Company's
proposed plan of reorganization; the ability of the Company to operate pursuant
to the terms of its debtor-in-possession financing; the Company's ability to
satisfy the conditions to effectuate a restated debtor-in-possession financing;
the ability of the Company to operate successfully under the Chapter 11 cases;
risks associated with operating a
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business in Chapter 11; adverse actions which may be taken by creditors and the
outcome of various bankruptcy proceedings; adverse developments with respect to
the Company's liquidity or results of operations; the Company's ability to
attract patients given its current financial position; the ability of the
Company to attract and retain key executives and other personnel; the effects of
healthcare reform and legislation on the Company's business strategy and
operations; the Company's ability to control costs, including labor costs in
response to the prospective payment system, implementation of its Corporate
Integrity Agreement and other regulatory actions; adverse developments with
respect to the Company's settlement discussions with the United States
government concerning ongoing investigations; and the dramatic increase in the
costs of defending and insuring against alleged patient care liability claims.
Many of these factors are beyond the control of the Company and its management.
The Company cautions investors that any forward-looking statements made by the
Company are not guarantees of future performance. The Company disclaims any
obligation to update any such factors or to announce publicly the results of any
revisions to any of the forward-looking statements to reflect future events or
developments.
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SUMMARY OF THE MATERIAL TERMS OF AMENDED PLAN
AFFECTING VENTAS
The following is a summary of certain material provisions of the Amended
Plan that affect Ventas. The summary does not purport to be complete and is
qualified in its entirety by reference to all of the provisions of the Amended
Plan, including all exhibits and documents described therein, as filed with the
Court and as may otherwise be supplemented.
Ventas will receive the following treatment under the Amended Plan:
The four master leases with Ventas will be assumed and simultaneously
amended as of the effective date of the Amended Plan (the "Amended Leases").
The principal economic terms of the Amended Leases are as follows:
(a) A decrease of $52 million in the aggregate minimum rent from the
annual rent as of May 1, 1999 to a new initial aggregate minimum rent of $174.6
million as of the first day of the first month after the effective date of the
Amended Plan.
(b) Minimum rent payable in cash will escalate at the annual rate of
3.5% for the period from May 1, 2001 through April 30, 2004. Thereafter,
minimum rent payable in cash will escalate at an annual rate of 2%, plus a 1.5%
annual accrued rent escalator (with an interest accrual at LIBOR plus 450 basis
points). All accrued rent will be payable upon the repayment or refinancing of
the new senior subordinated secured notes to be issued under the Amended Plan
and at such time, the minimum rent payable in cash will escalate at the annual
rate of 3.5% and there will be no further accrual feature.
(c) A one-time option, that can be exercised by Ventas 5 1/4 years
after the effective date of the Amended Plan, to reset the aggregate minimum
rent under one or more of the Amended Leases to the then current fair market
rental in exchange for a payment of $5 million (or a pro rata portion thereof if
fewer than all of the Amended Leases are reset) to the Company.
(d) Under the Amended Leases, the "Event of Default" provisions also
will be substantially modified.
In addition to the Amended Leases, Ventas will receive a distribution of
9.99% of the new common stock of the reorganized Company (subject to dilution
from stock issuances occurring after the effective date of the Amended Plan).
Ventas also will enter into a new tax escrow agreement with the Company as
of the effective date that will provide for the escrow of a federal income tax
refund received in 2000 and other federal, state and local refunds until the
expiration of the applicable statutes of limitation for the auditing of the
refund applications. The escrowed funds will be available for the payment of
tax deficiencies during the escrow period except that all interest paid by the
government in connection with any refund or earned on the escrowed funds will be
distributed
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equally to the parties. At the end of the escrow period, the Company and Ventas
will each be entitled to 50% of the proceeds in the escrow account.
All agreements and indemnification obligations between the Company and
Ventas, except those modified by the Amended Plan, will be assumed by the
Company as of the effective date of the Amended Plan.
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