Extendicare to sell US businesses for $870 million
Extendicare will sell nearly all of its U.S. operations to an investor group in an $870 million deal, the Canada-based long-term care company announced Friday.
The buyers are led by private equity firm Formation Capital LLC and an affiliate of Safanad Inc., a global principal investment firm. Extendicare has roughly 160 U.S. facilities, and it will retain 10 skilled nursing centers.
Extendicare leaders revealed last year that they intended to sell off the U.S. business. Uncertainty created by healthcare reform in the United States was one reason, an Extendicare official told McKnight's in July 2013.
“The U.S. is a very volatile and risky environment. Canada is more stable,” said Jillian Fountain, corporate secretary for parent company Extendicare Inc.
The purchasers will assume about $635 million in mortgage loans and other debt, Extendicare stated. After closing adjustments, taxes and other considerations, the company expects to receive $222 million in net cash.
“Importantly, this transaction generates substantial cash proceeds that accelerate our vision to further grow our Canadian business and expand our service offering,” President and CEO Timothy Lukenda stated in a press release issued Friday.
The deal is expected to close in the second quarter of 2015.