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EXHIBIT 99.1
[LETTERHEAD OF VENTAS]
Contact: Debra A. Cafaro
President and CEO
(502) 357-9000
VENTAS SHAREHOLDERS TO RECEIVE ADDITIONAL VALUE UNDER
VENCOR'S AMENDED PLAN OF REORGANIZATION
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Ventas working closely with lenders to obtain
waiver to long-term credit agreement
Louisville, KY (December 4, 2000) -- Ventas, Inc (NYSE:VTR) ("Ventas" or the
"Company") said today it has reached agreement with its primary tenant, Vencor,
Inc. (OTC/BB:VCRIQ.OB) ("Vencor"), and the other major constituencies in the
Vencor reorganization, on the material economic terms of the Amended Plan of
reorganization of Vencor, which was filed with the Delaware Bankruptcy Court on
December 1. In determining whether to vote in favor of the Amended Plan, Ventas
will consider these terms, as well as the final documentation of agreements to
be executed upon consummation of the Amended Plan, the terms of Vencor's exit
financing, distributions to be made to Vencor creditors, and other matters.
"We have consistently stated that we will support a consensual plan of
reorganization for Vencor that is reasonable and fair to all participants; gives
Vencor a sustainable capital structure and sufficient cash flow to meet its
reduced obligations; and allows Ventas shareholders to benefit from Vencor's
future profitability," Ventas President and CEO Debra A. Cafaro said. "This
Amended Plan -- as compared to the preliminary plan of reorganization filed by
Vencor on September 29 -- represents substantial improvement in the value that
Ventas shareholders will receive in the Vencor reorganization. This Amended Plan
represents significant progress towards the confirmation of a fully consensual
plan of reorganization for Vencor."
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Highlights of the Amended Plan
The key elements of the Amended Plan are:
o Ventas will receive all cash rent beginning May 1, 2001 through April
30, 2004. Previously the 3.5 percent annual rent escalator was split 2
percent cash and 1.5 percent non-cash. As previously stated, annual
rents will be $180.7 million in May 1, 2001 to April 30, 2002, $187
million in 2002 to 2003 and $193.6 million in 2003 to 2004.
o After April 30, 2004, the 3.5 percent rent escalator would be
comprised of 2 percent cash and 1.5 percent non-cash. Under Vencor's
Amended Plan, the non-cash portion would accrue at the annual rate of
Libor plus 450 basis points (compared to 6 percent in the previous
version of the plan) until it is paid. If Vencor refinances or repays
its new senior bank debt, the entire annual 3.5 percent escalator
would thereafter be payable on an all-cash basis (and any accrued
unpaid amount would then be due and payable).
o Between $30 million and $35 million in existing tax refund proceeds
will be held in escrow and used to satisfy any potential tax
liabilities related to periods before the Vencor/Ventas spin-off
transaction on May 1, 1998. When audits of the relevant tax periods
have been concluded, any residual amount will be shared 50/50 by
Ventas and Vencor. Interest will also be shared 50/50. This
arrangement is a substantial improvement from the one contemplated in
Vencor's original plan, under which Vencor would have retained sole
benefit of the tax refunds.
Items from the September 29 preliminary plan that are substantially unchanged
include:
o A proposed $130 million settlement of all civil claims and other
billing disputes against Vencor and Ventas by the Department of
Justice, acting on behalf of the Health Care Financing Administration
and the Department of Health and Human Services' Office of the
Inspector General ("DOJ"). Ventas would agree to pay $104 million, of
which $34 million is payable on the Vencor Effective Date and the
balance of $70 million is payable in quarterly installments over five
years, bearing interest at 6 percent. Under the proposed settlement,
Vencor would pay $26 million.
o Ventas will receive 9.99 percent of the common stock of reorganized
Vencor.
o Ventas will have a unilateral right to reset the amount of rents due
under the Vencor leases to a then "market" rental rate. This reset
right will be exercisable by Ventas approximately five years after the
Vencor Effective Date.
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o Vencor will reaffirm and perform all existing agreements and
indemnities arising out of the 1998 Vencor/Ventas spin-off
transaction.
With the filing of the Amended Plan, it is expected that on December 6 the
Court will hold a hearing to approve the Vencor disclosure materials. Ventas
added that it is working with Vencor, its creditors and the DOJ to resolve all
matters prior to such date. If approved, the disclosure materials will be mailed
to Vencor's creditors following the hearing, and Vencor will solicit creditor
approval for the Amended Plan.
There can be no assurance that Vencor will be successful in obtaining the
approval of its creditors for a restructuring plan, that any such plan will be
on terms acceptable to Ventas, Vencor and its creditors, or that any
restructuring plan will not have a material adverse effect on Ventas. Nor can
there be any assurance that Vencor and Ventas will be able to reach a settlement
with the DOJ, or that any such settlement will be on terms acceptable to Ventas,
or that any settlement with DOJ will not have material adverse effect on Ventas.
Ventas Credit Agreement
Under the Company's Amended Credit Agreement, it is an event of default,
subject to defenses that may be available to the Company, if a plan of
reorganization for Vencor were not to become effective by December 31, 2000. The
Company is working closely with its lenders under the Amended Credit Agreement
to obtain a waiver or amendment of this covenant, which requires the affirmative
vote of more than 50 percent in principal amount of the debt. There can be no
assurance that Ventas will obtain such a waiver or amendment.
Dividend
Ventas has the option of declaring its dividends on an annual, rather than
quarterly, basis. At present, Ventas intends to pay the minimum REIT dividend
for 2000 in one annual payment. Ventas expects that such payment will be made on
or before January 31, 2001. Accordingly, at its December 1 meeting, the Ventas
Board deferred taking action on its fourth quarter 2000 dividend consistent with
its stated goal of building cash reserves during the reorganization of Vencor.
Ventas is a real estate investment trust whose properties include 45
hospitals, 217 nursing centers and eight personal care facilities operating in
36 states.
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This Press Release includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act"). All statements regarding the Company's and its subsidiaries'
expected future financial position, results of operations, cash flows, funds
from operations, dividends and dividend plans, financing plans, business
strategy, budgets, projected costs, capital expenditures, competitive positions,
growth opportunities, expected lease income, continued qualification as a real
estate investment trust, plans and objectives of management for future
operations and statements that include words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend," "may," "could," and other similar
expressions are forward-looking statements. Such forward-looking statements are
inherently uncertain, and stockholders must recognize that actual results may
differ from the Company's expectations. The Company does not undertake any duty
to update such forward-looking statements.
Actual future results and trends for the Company may differ materially
depending on a variety of factors discussed 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, (a) the treatment of the Company's
claims in the chapter 11 cases of its primary tenant, Vencor, Inc. and certain
of its affiliates (collectively referred to in this paragraph as "Vencor"), as
well as certain of its other tenants, (b) the ability and willingness of Vencor
to continue to meet and/or honor its obligations under the agreements the
Company and Vencor entered into in connection with the 1998 spin off by the
Company of Vencor (the "1998 Spin Off"), including, without limitation, the
obligation to indemnify and defend the Company for all litigation and other
claims relating to the health care operations and other assets and liabilities
transferred to Vencor in the 1998 Spin Off, (c) the ability of Vencor and the
Company's other operators to maintain the financial strength and liquidity
necessary to satisfy their respective obligations and duties under the leases
and other agreements with the Company, and their existing credit agreements, (d)
the Company's success in implementing its business strategy, (e) the nature and
extent of future competition, (f) the extent of future health care reform and
regulation, including cost containment measures and changes in reimbursement
policies and procedures, (g) increases in the cost of borrowing for the Company,
(h) the ability of the Company's operators to deliver high quality care and to
attract patients, (i) the results of litigation affecting the Company, (j) the
results of the settlement discussions Vencor and the Company have been engaged
in with the federal government seeking to resolve federal civil and
administrative claims against them arising from the participation of Vencor
facilities in various federal health benefit programs, (k) changes in general
economic conditions and/or economic conditions in the markets in which the
Company may, from time to time, compete, (l) the ability of the Company to pay
down, refinance, restructure, and/or extend its indebtedness as it becomes due,
and to amend certain provisions of its Amended Credit Agreement that would
require the Company to repay substantially all of its indebtedness under the
Amended Credit Agreement if Vencor does not emerge from bankruptcy by December
31, 2000, and (m) the ability and willingness of the Company to maintain its
qualification as a real estate investment trust due to economic, market, legal,
tax or other considerations. Many of such factors are beyond the control of the
Company and its management
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