Alterra Healthcare Corporation Files Voluntary Petition
for Bankruptcy Reorganization
Normal Operations to Continue in Alterra Residences
Arranges for $15 Million of Debtor In Possession Financing
MILWAUKEE, WISCONSIN, January 22, 2003 Alterra Healthcare Corporation (AMEX: ALI), a national provider of assisted living residences (the "Company"), today announced that, in order to facilitate and complete its on-going restructuring initiatives, the Company filed a voluntary petition with the U.S. Bankruptcy Court for the District of Delaware to reorganize under Chapter 11 of the U.S. Bankruptcy Code. In announcing today's Chapter 11 filing, Company management emphasized that the filing would not affect the normal operation of its assisted living residences. None of the Company's subsidiaries or affiliates are included in the Chapter 11 filing.
In conjunction with the filing, the Company has secured a $15 million debtor-in-possession ("DIP") financing commitment, subject to Bankruptcy Court approval, from affiliates of certain principal holders of the Company's pay-in-kind securities issued in the summer of 2000. The Company expects that the DIP financing, together with the Company's cash flow from existing operations, will provide adequate liquidity to meet all future obligations to residents, employees and vendors and also to fund the costs of the bankruptcy proceedings. In addition, while there is no commitment or binding obligation at this time, the Company is in discussions with the DIP lenders and others regarding a possible equity or equity-linked investment in the Company upon the confirmation of the Company's plan of reorganization ("Exit Equity Financing").
"We believe the Chapter 11 filing is the appropriate and necessary next step to conclude the reorganization initiatives we began in 2001," said Patrick Kennedy, Chief Executive Officer and President. "The focus of our restructuring efforts to date has been portfolio rationalization and the restructuring of our senior financing obligations with secured lenders and lessors. During this time, the Company has disposed of over 100 non-strategic or under-performing residences and has restructured its commitments with many of its senior financing sources, while continuing to strengthen its internal operations. We appreciate the participation and support we have received from our senior financing sources. The Chapter 11 process will now permit us to restructure our junior capital structure, which includes unsecured obligations and claims, convertible subordinated debentures and common stock. The Company is in discussions to obtain an Exit Equity Financing commitment and expects to file its plan of reorganization ("Plan of Reorganization") during the first quarter of 2003. The confirmation of our Plan of Reorganization will enable the Company to conclude its restructuring process and to emerge with a sound capital structure."
Mark Ohlendorf, Senior Vice President and Chief Financial Officer, added, "The Company has filed motions with the Bankruptcy Court seeking approval to continuing paying its critical vendors in the normal course. As such, we expect no disruption in the operation of the Company's residences and expect to continue to provide a high level of care and services to our over 14,000 residents." Mr. Ohlendorf stated further, "Our Plan of Reorganization will benefit from the existence of many restructuring agreements that have been pre-negotiated with a number of parties, including certain of our lenders and lessors, since the commencement of our restructuring activities."
In addition, the Company announced that in recent months Timothy J. Buchanan, Natalie K. Townsend and Jerry L. Tubergen have resigned from the Company's Board of Directors, and Gene Burleson has been elected Chairman of the Board of Directors.
About Alterra
Alterra offers supportive and selected healthcare services to our nation's frail elderly
and is the nation's largest operator of freestanding Alzheimer's/ memory care residences.
Alterra currently operates in 24 states.
Forward-Looking Statements
Certain of the information contained herein should be considered "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of
1995 that reflect the Company's current views with respect to certain current and
future events and financial performance. Such forward-looking statements are and will
be, as the case may be, subject to many risks, uncertainties and factors relating
to the Company's operations and business environments which may cause the actual results
of the Company to be materially different from any future results expressed or implied
in such forward-looking statements. Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited to,
the following: the ability of the Company to continue as a going concern; the ability
of the Company to continue to comply with the terms of the DIP financing; the Company's
ability to obtain court approval with respect to motions in the Chapter 11 proceeding
prosecuted by the Company; the ability of the Company to develop, prosecute, confirm
and consummate a plan of reorganization with respect to the Chapter 11 proceedings;
the Company's ability to secure Exit Equity Financing in amounts necessary to effectively
recapitalize the Company; risks associated with third parties seeking and obtaining
court approval to terminate or shorten the exclusivity period for the Company to propose
and confirm a plan of reorganization, for the appointment of a Chapter 11 trustee
or to convert the case to a Chapter 7 case; the ability of the Company to obtain and
maintain normal terms with vendors and service providers; the ability of the Company
to obtain and maintain contracts that are critical to its operations; the potential
adverse impact of the Chapter 11 proceedings on the Company's liquidity or results
of operations; the ability of the Company to fund and execute its business plan; the
ability of the Company to attract, retain and motive key executives and associates;
the ability of the Company to attract residents to its facilities and retain such
residents; general economic conditions; government legislation and regulation; and
other risks and uncertainties as may be set forth from time to time in the Company's
reports filed with the Securities and Exchange Commission.
CONTACT:
Alterra Healthcare Corporation
Mark Ohlendorf, Chief Financial Officer
(414) 918-5403
Source: Alterra Healthcare Corporation Press Release