HCR ManorCare CEO Paul Ormond has asked for the immediate payment of a $100 million deferred settlement package stemming from a private equity takeover of the company back in 2007, according to a report in the New York Post.
The Carlyle Group, a Washington, D.C.-based private equity firm, bought the Toledo, Ohio-based HCR ManorCare a decade ago for $6.3 billion, with a provision granting Ormond the generous compensation package, according to unnamed sources cited by the Post. Amid news of storm clouds gathering over the major nationwide skilled nursing operator and its primary landlord, Quality Care Properties, Inc. (NYSE: QCP), Ormond reportedly asked for all $100 million — only to be told by the Bethesda, Md.-based real estate investment trust that such a payout would be ruinous for HCR ManorCare, the Post reported.
Ormond had originally been scheduled to receive the money over an extended period of time in order to lessen the tax burden, according to the Post.
The intertwined companies find themselves in escalating trouble: In April, QCP announced a forbearance agreement that would require HCR ManorCare to make cash rent payments of $32 million each month between April 2017 and June 2017, with an additional $7.5 million per month deferred until July. The companies were also in discussions to restructure their master lease agreement at that time, according to QCP.
But as Skilled Nursing News reported earlier today, HCR ManorCare failed to pay all of its June rent, citing declining profit projections associated with its QCP properties and growing pressures from its other creditors. The REIT is now considering a full equity takeover of HCR ManorCare, among other options for its struggling skilled nursing operator.
As of March 31, QCP owned 257 skilled nursing facilities in 29 states, according to its most recent quarterly report.
Spokespeople for QCP and the Carlyle Group told SNN that they had no comment. A request for comment from HCR ManorCare’s press team was not returned as of press time.
Written by Alex Spanko