Capital Senior Living Corporation Signs
Merger Agreements With ILMs
DALLAS--(BUSINESS WIRE)--Feb. 8, 1999--Capital Senior Living Corporation (NYSE:
CSU - news), one of the country's largest developers and operators of senior
living communities, announced today that it has entered into separate agreements
and plans of merger with ILM Senior Living, Inc. and ILM II Senior Living, Inc.
for a combined transaction value of approximately $174 million. The transactions
together will add a combined 13 communities to the current Capital portfolio of
19 owned communities.
Under the two merger agreements, both ILM Senior Living and ILM II Senior Living
would separately merge with and into a 100% owned direct subsidiary of Capital
Senior Living, with the aggregate issued and outstanding shares of ILM Senior
Living and ILM II Senior Living common stock eligible to receive 65% of the
merger consideration in cash (approximately $110.5 million) and 35% in 8%
convertible trust preferred securities (with a liquidation value of
approximately $59.5 million).
"We are extremely excited about the opportunity to move forward together with
the ILMs. We believe this transaction will bring significant benefits to the
shareholders of Capital, ILM and ILM II as well as ensure that the residents of
the ILM communities continue to receive quality, uninterrupted services from
Capital Senior Living," said Jeffrey L. Beck, Capital's Chief Executive Officer.
"Capital Senior Living, ILM Senior Living and ILM II Senior Living have a
history of working together. We have a proven track record with the ILMs by
increasing operating income and occupancies at the communities since we began to
manage them in 1996," said James A. Stroud, Capital's Chief Operating Officer.
"These results reflect the shared operating strategy of Capital Senior Living
and the ILMs of providing residents the ability to age in place by integrating
independent living with assisted living and personal care. The ILM communities
also mirror the type of communities currently owned by Capital which contain
approximately 82% independent living and approximately 18% assisted living
residences."
"The transactions will increase the critical mass of Capital by increasing the
number of owned communities by 68%, from 19 to 32," said Lawrence A. Cohen,
Chief Financial Officer. "Moreover, the transactions will add significant
resident and health care revenue as well as EBITDA while lowering management fee
income. Revenue from the communities being acquired approximated $34.2 million
for the twelve month period ended May 31, 1998. Capital's revenue for the twelve
month period ended September 30, 1998 was approximately $36.2 million and its
resident and health care revenue over that same period was approximately $20.7
million. As a result, the transactions are expected to significantly increase
the amount of revenue Capital derives from resident and health care services."
Capital Senior Living expects to account for the merger using the purchase
method of accounting. Headquarters for the combined company will be in Dallas,
Texas. Management at Capital Senior Living will run the combined company with
Jeffrey L. Beck as Co-Chairman and Chief Executive Officer, James A. Stroud as
Co-Chairman and Chief Operating Officer, Lawrence A. Cohen as Vice Chairman and
Chief Financial Officer, and Keith N. Johannessen as President.
J. William Sharman, Jr., Chairman and CEO of ILM I stated: "We believe that this
strategic merger
provides our shareholders an opportunity both for liquidity and the ability to
participate in the potential growth of the senior living industry. Capital has
managed our facilities since 1996 and this merger ensures that there should be
no disruption of services at the property level."
Both mergers have been approved by the boards of directors of each company and
each transaction requires the approval of the shareholders of Capital Senior
Living, ILM Senior Living and ILM II Senior Living. The mergers also are subject
to certain other customary conditions, including regulatory approvals, and are
expected to be completed during the second half of 1999.
Lehman Brothers, Inc. is acting as financial advisor to Capital Senior Living
and Schroder & Co. Inc. is acting as financial advisor to ILM Senior Living and
ILM II Senior Living in the mergers.
Capital Senior Living Corporation is one of the country's largest developers and
operators of senior living communities. The Company currently operates 34
communities in 17 states with a capacity of approximately 5,700 residents. The
Company currently has 30 communities under construction or development, which
will have a capacity of approximately 4,600 residents, including 23 new
Waterford Communities with a capacity of approximately 3,200 residents. The
Company is also expanding 9 existing communities to accommodate approximately
600 additional residents. Upon completion of these developments and expansions,
the Company is expected to increase its capacity to approximately 11,000
residents. The Company's operating philosophy emphasizes a continuum of care,
which integrates independent living, assisted living and personal care to
provide residents with the opportunity to age in place.
The forward-looking statements in this release are subject to certain risks and
uncertainties that could cause results to differ materially, including, but not
without limitation to, the Company's ability to find suitable acquisition
properties at favorable terms, financing, licensing, business conditions, risks
of downturns in economic condition generally, and satisfaction of closing
conditions such as those pertaining to licensure. These and other risks are
detailed in the Company's reports filed with the Securities and Exchange
Commission.
Contact:
Capital Senior Living Corp., Dallas
Scott Shamblin, 972/770-5600