Late Wednesday, Sunrise Senior Living released an 8-K delivering details of a tenth amendment, effective as of December 30, 2008 (the “Amendment”), to its Credit Agreement (as previously amended, the “Credit Agreement”) dated as of December 2, 2005 by and among Sunrise, certain subsidiaries of the Company party and its lenders.
The revised agreement also waived compliance with certain financial covenants set forth in the Credit Agreement and the applicability of certain cross-default provisions for the period commencing on December 30, 2008 and ending on March 30, 2009. The Amendment requires the Company to make principal repayments upon the Loans of $400,000 upon the execution and delivery of the Amendment by the Administrative Agent and Required Lenders and $1.1 million on or before January 23, 2009.
Additionally, the amendment increased Sunrise’s borrowing rates with respect to its Euro-dollar Rate Loans to LIBOR plus 4.75% and its Base Rate Loans to Base Rate plus 3.25% and installing a “floor” or minimum on it’s Base Rate Loan rates. Sunrise paid its lenders a modification fee of $400,000 in connection with the modification and stated that it does not expect to be in compliance with the financial covenants for the quarter ending on March 31, 2009.
Seems like an expensive extension for 3 months and an increase in borrowing rate but it beats declaring Sunrise in default and possibly forcing its hand into filing for bankruptcy……is this move prolonging the inevitable or is there light on the horizon?
For the full 8-K, click here.