Eagle Senior Living files Chapter 11 to implement restructuring

By Sarah Lizee

Olympia, Wash., Jan. 20 – American Eagle Delaware Holding Co. LLC, which does business as Eagle Senior Living, filed Chapter 11 bankruptcy on Jan. 14 in the U.S. Bankruptcy Court for the District of Delaware to complete a comprehensive financial reorganization, according to a press release.

The company said the Chapter 11 process will allow Eagle Senior Living communities to operate uninterrupted as the company works to achieve its financial goals.

With the support of a steering committee of its senior bondholders through a restructuring support agreement, Eagle Senior Living said it intends to emerge from the Chapter 11 process with a bolstered financial structure, allowing it to make additional investments in its communities.

The RSA contains agreed-upon terms for a prearranged plan of reorganization that, if approved by the required additional creditors and the bankruptcy court, would significantly reduce debt and provide needed financial flexibility.

“We have been working diligently with our bondholders to navigate the impacts of the Covid-19 pandemic, strengthen our long-term financial health and best position Eagle Senior Living to continue providing high-quality care and amenities to all residents,” Todd Topliff, president of American Eagle Delaware Holdings, said in the release.

Eagle Senior Living said it has also decided to pursue an orderly sale of its Vista Lake community.

Plan terms

According to the company’s disclosure statement for the plan, the restructuring provides for the funding of an additional $28.13 million in new money bond financing, comprising $10.91 million principal amount of new taxable series 2022A-1 bonds and $17.22 million of principal amount of new tax-exempt series 2022A-2 bonds to fund a capital expenditure fund of up to $15.23 million, and an operating fund of up to $6.44 million.

The restructuring also provides for an exchange of the roughly $215.53 million of outstanding series 2018 bonds for a pro rata share of the series 2022 bonds.

Specifically, consenting holders will have the opportunity to purchase the series 2022A-1 bonds in an amount proportionate to the outstanding principal amount of series 2018A-1 bonds that holder owns, plus a share of any series 2022A-1 bonds that are not purchased by other consenting holders.

The 2022A-1 bonds will bear interest at a fixed taxable rate of 6% per annum and mature nine years from issuance. Interest will be payable semiannually, and payments will be interest-only for the first four years. Annual principal payments will start after the interest-only period.

Likewise, consenting holders will have the opportunity to purchase series 2022A-2 bonds in an amount proportionate to the outstanding principal amount of series 2018A-2 bonds they own, plus a share of any series 2022A-2 bonds that are not purchased by other consenting holders.

The 2022A-2 bonds will bear interest at a fixed tax-exempt rate of 6% per annum and mature 14 years from issuance. Interest will be payable semiannually, and payments will be interest-only for the first eight years. Annual principal payments will start after the interest-only period.

The series 2022A-1 and 2022A-2 bonds will be secured by a first priority lien on all assets of the reorganized debtors, subject to permitted encumbrances.

The existing series 2018A-1 bonds, which currently total $140.76 million outstanding principal amount, will be exchanged for new series 2022B-1 bonds. Each holder of a 2018A-1 bond claim will be deemed to have exchanged its series 2018A-1 bonds for a new series of tax-exempt 2022B-1 bonds in an initial principal amount equal to the principal amount of series 2018A-1 bonds held by the holder plus accrued interest to the petition date, minus the Vista Lake redemption amount.

The series 2022B-1 bonds will be issued in the aggregate principal amount of $153.3 million and bear interest at a rate of 5% per annum for the first 10 years, 5¼% per annum for the next 10 years, and 5½% per annum for the remaining 15 years, with the final maturity 35 years from issuance.

Payments on the series 2022B-1 bonds will be interest only for the 17 years due and payable semiannually. Annual principal payments will start after the interest-only period.

The existing series 2018A-2 bonds, which currently total $19.16 million outstanding principal amount, will be exchanged for new series 2022B-2 bonds. Each holder of a 2018A-2 bond claim will be deemed to have exchanged its series 2018A-2 bonds for a new series of taxable 2022B-2 bonds in an initial principal amount equal to the principal amount of series 2018A-2 bonds held by the holder plus accrued interest to the petition date.

The series 2022B-2 bonds will be issued in the aggregate principal amount of $20.64 million and bear interest at a rate of 5% per annum for the first 10 years and 5¼% per annum for the remaining eight years, with the final maturity 18 years from issuance.

Payments on the series 2022B-2 bonds will be interest only for the first 14 years due and payable semiannually. Annual principal payments will start after the interest-only period.

The existing series 2018B bonds, which currently total $33.82 million outstanding principal amount, will be exchanged for new series 2022C bonds. Each holder of a 2018B bond claim will be deemed to have exchanged its series 2018B bonds for a new series of tax-exempt 2022C bonds in an initial principal amount equal to 50% of the sum of the principal amount of series 2018B bonds held by the holder plus accrued interest to the petition date.

The series 2022C bonds will be issued in the aggregate principal amount of $18.06 million and bear interest at a fixed tax-exempt rate of 2% per annum. The final maturity of the series 2022C bonds will be 35 years from issuance. The series 2022C bonds may be redeemed with excess cash flow.

The existing series 2018C bonds, which currently total $21.79 million outstanding principal amount, will be exchanged for new series 2022D bonds. Each holder of a 2018C bond claim will be deemed to have exchanged its series 2018C bonds for a new series of tax-exempt 2022D bonds in an initial principal amount equal to 10% of the sum of the principal amount of series 2018C bonds held by the holder plus accrued interest to the petition date.

The series 2022D bonds will be issued in the aggregate principal amount of $2.46 million and will not bear interest. The final maturity will be 35 years from issuance. These bonds may be redeemed with excess cash flow.

Other creditor treatment

Under the plan, administrative expense claims, accrued professional compensation claims, other priority claims and priority tax claims will be paid in full.

Holders of other secured claims will receive cash equal to the amount of their claims, the collateral securing their claims, reinstatement, or other treatment leaving their claims unimpaired.

To the extend holders of general unsecured claims have not been paid prior to the effective date, they will receive their pro rata share of a $250,000 general unsecured fund.

Intercompany claims will be canceled with no distribution to holders.

Because the debtors are nonprofit entities, the equity or ownership interests in the debtors are deemed held by the public, and not by any individuals or entities. Interests will be preserved, and no property or other distribution of value will be made on account of the interests.

Other details

The company has received interim approval of motions with the court that will allow it to meet go-forward commitments to all stakeholder groups through the Chapter 11 process, including employee wages and benefit programs.

The company received interim approval of a motion seeking access to cash collateral in which bond trustee UMB Bank, NA has an interest.

In its petition, the company listed $10 million to $50 million in assets.

Eagle Senior Living's parent company, American Eagle Lifecare Corp., and management company, Greenbrier Senior Living, are not included in the Chapter 11 filing. Greenbrier Senior Living continues to manage all of the communities.

Eagle Senior Living is represented by Polsinelli as legal counsel and FTI Consulting as restructuring and financial adviser.

The Ann Arbor, Mich.-based senior living community provider filed bankruptcy under Chapter 11 case number 22-10028.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.