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HomeMy WebLinkAbout02-12-07 A LV"v ;)007 -/'-/ / McNees Wallace & Nurick LLC attorneys at law CHARLES T. YOUNG, JR. DIRECT DIAL: (717) 237-5397 E-MAIL ADDRESS:CYOUNG@MWN.COM February 12, 2007 Glenda Farner Strasbaugh Clerk of Orphans Court/Register of Wills Cumberland County Courthouse First Floor 1 Courthouse Square Carlisle, PA 17013-3387 BY HAND DELIVERY C) ~o ~'i ;-g 'IO .~~~ r-..J = => -' ..,., rr1 co RE: In Re Sale of Forest Park Health Center :.-.-) C) -0 .'~~:.2 --1-1 :x J~l~ w o 0"' Dear Ms. Strasbaugh: Enclosed for filing please find an original and two copies of the Petition for Approval of the Sale of Forest Park Health Center, together with the required fee. Kindly time-stamp the extra copies and return them to me in the envelope provided. Thank you for your assistance with this matter. Enclosure celene. : By Mark A. Pacella, Chief Deputy Attorney Gene al Deborah L. Spranger, Esq. (By U.S. Mail) P.O. Box 1166 .100 PINE STREET. HARRISBURG, PA 17108-1166 . TEL: 717.232.8000. FAX: 717.237.5300 .WWW.MWN.COM COLUMBUS, OH . STATE COLLEGE, PA. LANCASTER, PA. HAZLETON, PA. WASHINGTON, DC N IN RE SALE OF FOREST PARK: IN THE COURT OF COMMON PLEAS HEALTH CENTER, OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS COURT DIVISION NO. .;;:JOD, - 0 \ L\ \ PETITION FOR APPROVAL OF THE SALE OF FOREST PARK HEALTH CENTER o ":0 <:0 _.~~C) ~5:t ~ ~",,-.-::-~ __ (_r) >~ . ,tiC;-; -,,,~ _'_..1 .._\ Mark M. Van Blargan Attorney 1.0. No. 55921 Charles T. Young, Jr. Attorney 1.0. No. 80680 John W. Greenleaf, III Attorney 1.0. No. 87713 McNEES WALLACE & NURICK LLC P.O. Box 1166, 100 Pine Street Harrisburg, PA 17108-1166 Phone: (717) 232-8000 Fax: (717) 237-5300 Attorneys for Petitioners r....:> = = -' -r'1 rT'\ c:J N -0 ::I: c..) .. \.0 PETITION FOR APPROVAL OF SALE OF FOREST PARK HEALTH CENTER PHI and its primary subsidiary, Presbyterian Homes, Inc. (collectively, "PHI" or the "Petitioner"), by and through their attorneys McNees Wallace & Nurick LLC, in support of this Petition in connection with the sale of the assets of Forest Park Health Center to Guardian Elder Care Management, Inc. and its designated affiliates, respectfully state as follows: A. JURISDICTIONAL STATEMENT 1. This Court possesses mandatory jurisdiction with respect to this Petition pursuant to Section 711 (21) of the Probate, Estates and Fiduciaries Code ("PEF Code") of the Commonwealth of Pennsylvania, 20 Pa. C.S.A. ~711 (21) and Pennsylvania Rule of Judicial Administration No. 2156(1). 2. This Petition is submitted in accordance with Sections 5547(b), 5550 and 5930 of the Pennsylvania Nonprofit Corporation law of 1988 (the "NCl"), 15 Pa. C.S.A. ~~5547(b), 5550, 5930. B. NOTICE 3. Other than the Petitioner, the only party with an interest in this proceeding is the Office of the Attorney General of the Commonwealth of Pennsylvania (the "OAG"), as parens patriae for charitable organizations. 4. Written notice of the presentation of this Petition has been given to the OAG, and the OAG has been requested to issue a letter indicating that it has no objection to the proposed sale of Forest Park's assets. 2 C. BACKGROUND OF PROPOSED SALE 5. Forest Park Health Center ("Forest Park") is a skilled nursing facility in Carlisle, Cumberland County, Pennsylvania that offers residents long-term and short-term skilled nursing care, skilled nursing respite service, rehabilitative therapy, therapeutic pet visits, hospice care, and a specialized dementia/Alzheimer's unit. Forest Park is wholly owned and operated by Presbyterian Homes, Inc., a Pennsylvania non-profit corporation that is the major subsidiary of PHI, also a Pennsylvania non-profit corporation. Presbyterian Homes, Inc. owns the land, building and operational assets of Forest Park. 6. The mission of Petitioner is to promote health by providing a full range of high-quality healthcare, housing and other related community services directed primarily to the elderly. As such, PHI serves as the direct or indirect parent company for a number of continuing care retirement communities, independent living communities, health centers, assisted living facilities and skilled nursing facilities throughout Pennsylvania, Delaware and Maryland. 7. Petitioner acquired Forest Park in 1971, marking Petitioner's transition from a provider of personal care and independent living services to a provider of rehabilitation and health care services to seniors. 8. In more recent years, Petitioner has focused on the development of facilities operating a full continuum of care on a single campus. 9. Forest Park, which is situated on 3.19 acres of land with no room for expansion, cannot be expanded into a full service facility on a single campus. 3 1 O.ln addition, with the advancing age of Forest Park's building, Petitioner would need to invest significant capital into Forest Park in the coming years in order to maintain Petitioner's historically high standards. The cost of such a renovation would be very costly, and with Petitioner's high Medicaid population, as well as a very competitive nursing environment (with one competitor right across the street from Forest Park), the return on investment for such a renovation would be very low. 11. Accordingly, PHI's Board of Directors determined that PHI could serve more people better by selling Forest Park to a third party and utilizing PHI's funds elsewhere. 12.ln July of 2006, PHI contracted with Herbert J. Sims & Co. to introduce PHI to qualified potential purchasers of Forest Park. Herbert J. Sims & Co. and PHI produced sale-offering materials, and distributed these materials to a number of potential purchasers. 13. PHI received bids from Guardian, AVIV Asset Management, LLC in Chicago, Illinois and American Senior Living Communities, Inc. in Frederick, Maryland. 14. Guardian was selected by PHI's Board of Directors based on its competitive bid and reputation for quality of care as a family owned business. D. BACKGROUND OF GUARDIAN 15. Guardian Elder Care Management, Inc. is a proprietary, family-owned organization created in 1995 for the purpose of acquiring and managing long- term care facilities 4 16. Since 1995, Guardian has acquired, through various affiliated corporate entities, eighteen (18) separate facilities. Of these eighteen (18) facilities, fifteen (15) are located in the Commonwealth of Pennsylvania, two (2) are located in the State of Ohio, and one (1) is located in West Virginia. 17. Over the last two years, Guardian has developed three (3) ancillary divisions: a long-term care pharmacy, a rehabilitation division and a home care division. In total, Guardian affiliates own 1,466 long-term care beds, most of which are skilled nursing facility beds. It is Guardian's intent to continue to grow its long-term care business through the acquisition of skilled nursing facilities. E. BACKGROUND OF PROPOSED ASSET SALE 18. Pursuant to an Asset Purchase Agreement dated December 27, 2006 (the "Asset Purchase Agreement") by and between PHI, Presbyterian Homes, Inc. and Guardian Elder Care Management, Inc. or its Designee, Assignee or Nominee, PHI and Presbyterian Homes, Inc. will sell certain assets of Forest Park to Guardian or Guardian's affiliates. As with other similar acquisitions by Guardian, and as more fully described herein, Guardian has established a newly formed Pennsylvania limited liability company to own the operational assets of Forest Park, and Guardian has established a newly formed limited partnership to own the real property upon which Forest Park sits. 19. Pursuant to the Asset Purchase Agreement, Guardian will purchase from PHI and Presbyterian Homes, Inc. substantially all of the assets that are used in, and necessary for, the operation of the nursing facility, including, but not limited to: (a) the approximately 3.196 acres of land upon which Forest Park 5 sits; (b) all equipment, machinery, tools, maintenance supplies, office equipment and furniture used to operate Forest Park's nursing facility; (c) all inventories and supplies; (d) all deposits and prepayments from residents of the facility; (e) the name "Forest Park Health Center;" (f) all books and records relating to the operation of Forest Park; (g) the rights of PHI and Presbyterian Homes, Inc. in all residency agreements, including all resident trust funds; (h) all licenses, government approvals and permits to operate the facility; and (i) all agreements and contracts which Guardian expressly agrees to assume. 20. Guardian will not be purchasing certain specified assets of PHI and Presbyterian Homes, Inc., including, but not limited to, accounts receivable. 21.ln consideration for the purchase of the assets, Guardian will pay to PHI at the closing a sum equal to $6,600,000.00 in immediately payable funds, to be paid by wire transfer. Certain prorations and adjustments will be made to this amount as required in connection with the payment of various taxes and the continuation of various service contracts and utilities. In addition, Guardian has already paid to PHI a sum of $50,000 as an initial down payment, and this amount will be deducted from the final purchase price due at closing. 22. Guardian will not assume any liabilities of PHI or Presbyterian Homes, Inc., other than liabilities arising under certain contracts, which Guardian agrees to assume. 23. Closing is scheduled to occur on or before April 1 , 2007, and the sale of assets will be effective as of the closing, provided that all conditions to closing 6 set forth in the Asset Purchase Agreement have been satisfied and/or waived, including, without limitation, all necessary governmental approvals, including the approval of this Court. 24. Guardian will assign its rights under the Asset Purchase Agreement to two affiliated entities. 25. Guardian will assign its right to purchase the operating assets of Forest Park to Guardian Elder Care at Carlisle, LLC, a newly formed Pennsylvania Limited Liability Company ("Carlisle LLC"). Guardian holds a 99% ownership interest in Carlisle LLC, and Brockway Elder Care Management, Inc., a Pennsylvania business corporation, holds the remaining 1 % interest. 26. Guardian will assign its right to purchase the real property upon which Forest Park sits to Guardian Elder Care at Carlisle, LP, a newly formed Pennsylvania limited partnership ("Carlisle LP"). Guardian Elder Care, Inc., a Pennsylvania business corporation, holds a 1 % general partnership interest in Carlisle LP. Guardian Real Estate Management Company, a Pennsylvania partnership, holds a 99% limited partnership interest in Carlisle LP. F. COUNT 1: APPROVAL OF SALE/USE OF PROCEEDS 27. The averments of Paragraphs 1-26 are incorporated herein as if fully set forth. 28. Section 5930(a) of the NCL provides: (a) General Rule. A nonprofit corporation shall not sell, lease away or exchange all or substantially all, its property and assets, with or without good will, unless and until a plan of sale, lease or exchange of assets with respect thereto shall have been adopted by the corporation in the manner provided in this subchapter with respect to adoption of a plan of merger. In order to make effective any plan of sale, lease or exchange of assets so adopted it shall not be necessary to file any articles 7 or other document in the Department of State, but the corporation shall comply with the requirements of Section 5547(b) (relating to nondiversion of certain property). 15 Pa. C.S.A. ~5930(a). 29. Section 554 7(b) of the NCL provides: (b) Non-diversion of certain property. Property committed to charitable purposes shall not by any proceeding under Chapter 59 (relating to fundamental changes) or otherwise, be diverted from the objects to which it was donated, granted or devised, unless and until the Board of Directors or other body obtains from the Court an order under 20 Pa. C.S.A. Ch. 61 (relating to estates) specifying the disposition of the property. 15 Pa. C.S.A. ~5547(b). 30. Petitioner's sale of Forest Park to Guardian will allow Petitioner to extend its mission of service to the elderly by investing proceeds of the sale of Forest Park toward the continued development of facilities offering a full continuum of care on a single campus. The sale also prevents Petitioner from diverting funds from such full service facilities to the costly renovation of Forest Park, when the return on investment from such renovation is expected to be low, and where Guardian is better suited to operate Forest Park in the competitive nursing care environment occupied by Forest Park. WHEREFORE, Petitioner respectfully requests this Court to enter an Order that (1) the sale of Forest Park to Guardian is consistent with Petitioner's charitable purpose pursuant to Section 5547(b) of the NCL; and (2) the Petitioner's disposition of the proceeds from the sale of Forest Park to develop facilities offering a full continuum of care on a single campus is permitted under Section 5547(b) of the NCL. 8 Dated: February Q, 2007 9 By Mar M. Van Blar Attorney 1.0. N . 5 21 Charles T. Yo ng Jr. Attorney 1.0. o. 0680 John W. Gre at, III Attorney 1.0. o. 87713 P.O. Box 1166, 100 Pine Street Harrisburg, PA 17108-1166 Phone: (717) 232-8000 Fax: (717) 237-5300 Attorneys tor Petitioners ., CERTIFICATE OF SERVICE -<* I, Charles T. Young, Jr., hereby certify that on this \~ day of February 2007, a true and correct copy of the foregoing Petition for Approval of the Sale of Forest Park Health Center was served by the means indicated below on the following: For the Commonwealth of Pennsylvania Mark A. Pacella, Chief Deputy Attorney General Charitable Trusts and Organizations Section Public Protection Division Office of the Attorney General 14th Floor, Strawberry Square Harrisburg, PA 17120 (BY HAND DELIVERY) Attorney for Guardian Elder Care Manaaement. Inc. Deborah L. Spranger, Esq. Saul Ewing LLP 1200 Liberty Ridge Drive Suite 200 Wayne, PA 19 (BY U.S.