Orianna Strikes Back at Omega Over Terminated Restructuring Deal

Orianna Health Systems fired back at landlord Omega Healthcare Investors (NYSE: OHI), claiming that the real estate investment trust’s (REIT) decision to terminate a restructuring deal will prove detrimental to both parties.

“Orianna is disappointed by Omega’s actions, which we believe will only cause delay in finalizing Orianna’s reorganization and impair the recovery ultimately realized by all constituencies in this process, including Omega,” the company said in a statement e-mailed to SNN late Tuesday.

The Hunt Valley, Md.-based Omega announced earlier this week that it would terminate its involvement in a proposed restructuring deal that a federal bankruptcy court approved in May. Under that now-scuttled deal, Orianna — which entered Chapter 11 in March — would receive up to $30 million in debtor-in-possession financing from Omega as the parties worked out the exact details of the provider’s restructuring effort.


That went out the window this week as Omega cited frustration with the process and a desire to protect its investors.

“The company will be considering and/or pursuing alternative courses of action to protect our assets and shareholder value,” CEO Taylor Pickett said in a statement announcing the move, adding that the REIT still intended to realize the $32 million to $38 million in rent from its Orianna properties that it had estimated in the original restructuring plan.

In response, Orianna called the move “unjustified and inconsistent with its agreements,” and indicated that it will now pursue “a different path” as it attempts to find a way forward.


“We believe Orianna will be able to complete its reorganization on a timely basis, preserve substantially all the terms of the transactions that had been contemplated under the restructuring support agreement, and treat all parties equitably while causing no disruption in its operations despite Omega’s conduct,” the company asserted in its statement. “Importantly, Omega has promised in open court not to take any action that would impair Orianna’s ability to provide services at any of its facilities.”

The provider also insisted that it would continue to provide “quality care” to its residents during the process.

A spokesperson for Omega did not respond to a request for comment as of press time.

Chad Vanacore, an analyst with investment firm Stifel, told SNN earlier this week that Omega was actually ahead of schedule on the reorganization plan after transferring its Orianna properties in Mississippi to a new operator on July 1, with more transactions expected in the coming months.

“Management is experienced with these types of negotiations, and we ultimately believe OHI will be successful at selling or transitioning the remaining assets,” Vanacore said.

Written by Alex Spanko

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