Exhibit 99.1
CONTACT: Leigh C. Comas, Vice President, Finance and Treasurer
Kimberly A. Holland, Director, Investor Relations
FOR IMMEDIATE RELEASE
MANOR CARE, INC. TO SEPARATE
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HEALTH CARE SERVICES AND REALTY OPERATIONS
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-- ManorCare Health Services to Operate Assisted Living, Skilled
Nursing, Institutional Pharmacy and Home Health Businesses --
-- Manor Care Realty to Focus on Accelerated Development of Assisted
Living Facilities --
Gaithersburg, Maryland, September 15, 1997 -- Manor Care, Inc. (NYSE: MNR)
today announced that its Board of Directors has approved the separation of
Manor Care into two public companies, both of which are anticipated to be
listed on the New York Stock Exchange. This separation will be achieved
through a one for one, pro rata distribution to stockholders of all
outstanding shares of ManorCare Health Services, Inc., a newly-formed
company to own and operate Manor Care's assisted living business and to
lease and operate Manor Care's skilled nursing facilities. ManorCare Health
Services will also own Manor Care's institutional pharmacy and home health
businesses. Manor Care, which will be renamed Manor Care Realty, Inc., will
be a health care real estate company focused on the ownership,
construction, development and acquisition of health care properties,
including skilled nursing and assisted living facilities. Manor Care Realty
will continue to own its skilled nursing facilities and Mesquite Hospital.
The proposed separation is subject to receipt of a ruling from the Internal
Revenue Service that the transaction will be tax free to Manor Care and its
shareholders and to receipt of a satisfied solvency opinion, necessary
regulatory approvals and related licensing arrangements. In connection with
the transaction, Manor Care Realty will incur indebtedness of approximately
$750 million via a public issue of debentures, intercompany indebtedness
with ManorCare Health Services and bank borrowings. The new indebtedness is
expected to be put in place contemporaneously with the completion of the
distribution transaction which is anticipated to occur before calendar year
end.
At the time of the distribution, Manor Care Realty will capitalize
ManorCare Health Services with approximately $250 million in cash and a
$250 million intercompany note. This initial funding will provide ManorCare
Health Services with the financial foundation and flexibility it needs to
build itself into a leading participant in assisted living.
Stewart Bainum, Jr., Manor Care's Chairman and Chief Executive Officer,
said, "Fundamental demographic forces and health care industry trends are
driving the growth of the assisted living business. The separation of Manor
Care into distinct real estate and health care services companies will
provide each company with the financial resources and managerial focus to
capitalize on this significant opportunity.
"Specifically, the Board of Directors believes that the separation will
significantly improve each company's ability to raise equity capital on a
cost-effective basis to fund its expansion plans.
"We also believe that providing our shareholders the opportunity to have an
investment in the growth profiles of both these businesses, each with a
distinct strategy for being a leading participant in the senior support
health care industry, can offer them significant and sustainable value."
ManorCare Health Services
ManorCare Health Services will provide a full continuum of senior support
services through its ownership and operation of Manor Care's assisted
living facilities, its leasing and operation of Manor Care's skilled
nursing facilities, and its controlling interests in Vitalink Pharmacy
Services, Inc. (NYSE: VTK), which owns and operates institutional
pharmacies, and In Home Health, Inc. (NASDAQ: IHHI), which provides
comprehensive health care services to clients in their homes.
Over the next five years, ManorCare Health Services plans to acquire
approximately 200 new assisted living facilities to be developed by Manor
Care Realty. These and other potential acquisitions form the core of
ManorCare Health Services' strategy to become the nation's foremost
provider of high-quality senior support services within the private pay
segment.
Approximately 170 of the newly developed facilities will be Arden Courts,
which provide assistance to individuals suffering from early to
middle-stages of Alzheimer's disease or related memory impairment, and the
remainder will be Springhouse senior residence facilities, serving the
general assisted living population.
Manor Care Realty
Over the past three years, Manor Care has established itself as a leader in
the high-growth, high-margin private pay segment of the assisted living
industry. The assisted living industry is currently experiencing
unprecedented market demand. Driven by America's aging population,
increasing life expectancies and health care industry trends toward greater
diversity of senior support care offerings and services, demand for
assisted living services is expected to continue to grow significantly over
the next thirty years.
Manor Care Realty's strategy is to become one of the largest health care
real estate companies through its ownership and development of health care
facilities that serve the senior population. Over the next 5 years, Manor
Care Realty will focus on the site selection, development and construction
of approximately 200 assisted living facilities for sale to ManorCare
Health Services under a Development Agreement between the two companies, as
well as the acquisition and development of skilled nursing facilities. The
Development Agreement contemplates pricing arrangements which will include
compensation to Manor Care Realty for short-term start-up costs and
expenses intended to eliminate any dilutive effects of the development
program on Manor Care Realty's results of operations. In addition to the
income from these sales, Manor Care Realty will also benefit from a Lease
Agreement, pursuant to which ManorCare Health Services will lease Manor
Care Realty's skilled nursing facilities.
The transaction also contemplates equity financing by Manor Care Realty
sufficient to provide ManorCare Health Services with funding, financial
strength and flexibility necessary to execute its accelerated property
development program, which is expected to entail investment in the range of
$1.5 billion. In addition, Manor Care, Inc. anticipates calling the
outstanding $150 million 9 1/2% Senior Subordinated Notes due 2002 on or
about the first call date of November 15, 1997.
Joseph R. Buckley, Executive Vice President of Manor Care, Inc., will be
President and Chief Executive Officer of Manor Care Realty, Inc. Donald C.
Tomasso, Executive Vice President of
Manor Care, Inc., will be President and Chief Executive Officer of
ManorCare Health Services. Stewart Bainum, Jr. will serve as Chairman of
both companies. The Bainum family, which currently owns approximately 30%
of Manor Care's outstanding common stock, will retain their current
holdings in Manor Care Realty and ManorCare Health Services following the
distribution.
In addition to Stewart Bainum, Jr. and Donald C. Tomasso, directors of
ManorCare Health Services will include: Regina Herzlinger, William H.
Longfield, Frederic V. Malek, Jerry E. Robertson and Kennett L. Simmons.
Manor Care Realty directors in addition to Stewart Bainum, Jr. will
include: Stewart Bainum, Joseph R. Buckley, Ann Torre Grant and Kennett L.
Simmons.
The company filed a registration statement and 8-K today with the
Securities and Exchange Commission which explains the proposed distribution
in detail and provides financial and other important information regarding
the transaction and both resulting companies. Copies of the registration
statement and 8-K filing can be obtained from the Securities and Exchange
Commission.
SBC Warburg Dillon Read Inc. has served as exclusive financial advisor to
Manor Care in connection with the transaction. Chase Securities Inc. and
SBC Warburg Dillon Read have been retained in connection with the debt
financings anticipated by Manor Care Realty.
Manor Care, Inc. is one of the largest long-term care providers in the
United States. The Company operates 206 health care facilities containing
27,809 beds in 29 states.
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