GHP October 2016

36 | ghp October 2016 Deals Ventas Issues Secured Debt Financing Commitment for Ardent Health Services to Merge with LHP Hospital Group To complete the purchase of LHP, Ventas is providing a commitment to make a five-year LIBOR-based loan, guaranteed by Ardent’s parent company, and bearing an initial interest rate of approximately 8%. Ardent will also receive a significant equity contribution from its majority owner, an affiliate of Equity Group Invest- ments (EGI). The transaction is structured to enable Ardent to maintain its strong balance sheet and potential for future growth and investment. “This commitment is aligned with our position as the premier capital partner to leading senior living and healthcare providers and our strategy of building a for- midable, high quality hospital business,” said Ventas chairman and chief executive officer Debra A. Cafaro. “The LHP acquisition validates our investment last year in Ardent’s experienced management team and scalable infrastructure, and its ability to consolidate the large, fragmented hospital sector.” “We are excited by Ardent’s acquisition of LHP, which expands Ardent’s business by 50% and creates the second largest private, for-profit hospital operator in the United States with over $3 billion in revenues. This transaction enhances Ardent’s scale and diversifica- tion by adding a high-quality portfolio with significant market share in attractive markets. Ardent will also benefit from LHP’s strong margins, excellent payor mix, significant synergy opportunities and outstanding joint venture partner relationships with leading not-for- profit and academic medical centers. This accretive, well-structured loan will enhance Ventas’s ability to drive reliable growth and income from our diversified portfolio for the benefit of shareholders.” Ventas expects the Loan to be accretive to 2017 normal- ised funds from operations on a leverage neutral basis. Ventas expects to fund the transaction using proceeds of asset sales and loan repayments, cash on hand and oth- er capital sources. The acquisition agreement between Ardent and LHP and Ventas’s Loan commitment are subject to customary conditions to closing and approv- als. There can be no assurance that the acquisition of LHP will occur or that Ventas will fund the Loan. Following the completion of Ardent’s acquisition of LHP, Ardent will benefit from significant scale and diversification, operating 19 high-quality hospitals with more than 3,200 beds across six states and employing approximately 18,000 employees, including more than 475 physicians. With LHP, Ardent will also gain significant relationships with outstanding joint venture partners, including leading not-for-profit and academ- ic medical centers such as Ascension, Hackensack Meridian Health and Portneuf Health Care. Existing Ardent management will lead the combined company with the assistance of key LHP executives, and expects to realise meaningful synergies in the transaction. Headquartered in Plano, Texas, LHP is owned by affil- iates of the private equity firm CCMP Capital Advisors, LLC and the CPP Investment Board as well as certain members of management and its board of directors. Ventas owns substantially all of Ardent’s current real estate, including 10 of its 14 hospitals and related medical facilities. Ardent is owned by an entity con- sisting of an affiliate of EGI, Ardent management, and Ventas, which owns a 9.9% equity stake. Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of approx- imately 1,300 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, life science buildings, skilled nursing facilities, specialty hospi- tals and general acute care hospitals. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. Ventas, Inc. announced that it has issued a commitment to pro- vide secured debt financing in the amount of $700 million to a subsidiary of Ardent Health Services in connection with Ardent’s agreement to acquire LHP Hospital Group, Inc., also announced recently. Terms of the purchase were not disclosed. The trans- action is expected to close in the first quarter of 2017, pending customary regulatory reviews and approvals.