Tuesday, October 20, 2009
Sunrise gets more time on credit line
Sunrise Senior Living, a McLean-based operator of assisted living facilities, said Monday that it won a one-year extension on an expiring credit line. The $62.9 million of bank debt was scheduled to come due in December, and Sunrise would have been unable to repay it, chief executive Mark Ordan said. That would have put its lenders in a position to force Sunrise into bankruptcy.
The banks appear to have realized that it was better for all concerned for the company to run its business without a sword hanging over it, Ordan said. Sunrise agreed to pay the lenders $30 million from the planned sale of 21 facilities or to give the banks a lien on the properties if the sale is not completed, Ordan said.
The lenders include Bank of America, Wells Fargo, Wachovia, PNC, and Capital One as a result of its acquisition of Chevy Chase Bank.
Sunrise is not out of the woods. As of June 30, Sunrise was in default on other borrowings -- $360.4 million of long-term debt.
-- David S. Hilzenrath
Erickson Retirement files for Chapter 11
Erickson Retirement Communities said it has filed for Chapter 11 bankruptcy protection and has agreed to be purchased by Redwood Capital Investments.
Erickson spokesman Mel Tansill said the bankruptcy filing in Dallas and the agreement with Redwood took place on Monday. He said Erickson, which is based in Baltimore County, must restructure its debt to complete the sale. Tansill said Erickson will also reorganize by separating its management and real estate arms. The actions require court approval. Erickson expects approval in the first quarter of 2010.
Erickson operates 19 communities with 23,000 residents.
-- Associated Press
D.C. settles lawsuit against Wachovia
District officials have signed an agreement with Wachovia Securities to settle its lawsuit against the company over allegations from D.C. clients that the firm misled investors about the safety of auction-rate securities.
Gennet Purcell, acting commissioner of the city's Department of Insurance, Securities and Banking, said the firm's securities dealers pitched the instruments to clients as cash-like investments that are safe. However, the securities -- long-term investments that are subject to complicated auction processes -- failed last year and led to illiquidity and lower interest rates for investors.
A Wells Fargo spokeswoman forwarded a statement from Daniel J. Ludeman, president and chief executive of Wachovia Securities, issued in August 2008 when the deal was being worked out. "Since this issue arose in February when auctions first started to fail, we have played a leading role in encouraging ARS issuers to restore liquidity to all of our clients. . . . [The agreement] in principle underscores our desire to ensure that clients who purchased ARS at Wachovia receive the liquidity they need."
The order requires Wachovia to repurchase the securities from D.C. clients and pay a $311,765.11 fine to the city. The fine is part of D.C.'s share of a $50 million settlement negotiated by a multistate task force of state regulators.
-- V. Dion Haynes
Novartis to pay $75 million to HGS
Human Genome Sciences of Rockville said it will be paid $75 million by the Swiss drugmaker Novartis for successful clinical testing of the hepatitis C drug candidate Zalbin. The companies plan to file for U.S. and European regulatory approval in the fourth quarter, Human Genome Sciences said. The drug will be called Zalbin in the U.S. and Joulferon in the rest of the world. The milestone payment will be made during the fourth quarter of 2009.
Human Genome Sciences and Novartis will market the drug together in the United States, sharing costs and profits. Novartis will sell the drug in all other markets and pay royalties to HGS. Including the $75 million payment, Human Genome Sciences will have received $207.5 million out of a possible $507.5 million in milestone payments on the drug.
-- Associated Press