LOS ANGELES, July 11, 2005 (PRIMEZONE) -- Quality of Life Health Corporation (Pink Sheets:QLHC) announced today that it has achieved a major milestone in its growth-through-acquisition strategy by securing a $25 million acquisition credit line specifically for buying additional senior long-term care facilities. The credit line will be deployed as the Company's equity portion of what is typically a 25 percent equity/75 percent senior debt funding structure for acquiring senior care facilities. This could allow the Company to acquire upwards of $100 million in additional facilities with standard senior debt financing from third-party lending institutions to compliment the acquisition line.
The Company also announced that the Board voted unanimously in favor of expanding its LifeHouse brand name, announced for its subsidiary on April 14, 2005, to the corporate level. Effective this week, the Company will change its name to LifeHouse Retirement Properties, Inc. (LHRP), reflecting its new focus solely on growing its assisted living franchise throughout the U.S. The Company has applied for a new trading symbol which it expects to receive later this week.
Rowan Farber, President of QLHC, explained that the Company has not only secured a $25 acquisition line, but has aligned itself with a strong strategic partner in NAMCO, the principle investor, stating: "This acquisition 'war chest' provides the Company with a tremendous and unprecedented growth capability. We have worked diligently over the past year to stabilize our operating platform and identify a versatile acquisition partner who recognizes the potential value of our long-term mission and strategy. This mission involves building a scalable business with predictable cash flow and a strong real estate portfolio in the long-term care sector."
The $25 million acquisition credit line was structured as a 30-month revolving credit facility. After acquiring a facility, the Company's experienced management team focuses on improving operations until it reaches a target stabilized occupancy of over 90 percent. The stabilized cash flow will potentially generate significant incremental cash flow for the acquisition target and LHRP. Upon stabilization, the Company will seek to refinance an acquired facilities' total debt (both senior acquisition debt and the revolving acquisition credit line) with permanent long-term debt financing, at a lower cost of capital. Senior permanent refinancing is generally available though the Housing and Urban Development (HUD) Section 232 refinancing programs and other low-cost financing sources. The long-term financing should potentially repay the revolving acquisition line, which could then be utilized again to acquire additional facilities. As part of the closing on the $25 million acquisition line, QLHC provided stock warrants to the investor for up to 30 percent of the current outstanding shares on a fully diluted basis, exercisable over a 10-year period.
The Company has also announced a 1:3 reverse stock split as part of its long-term goal to increase share price and reduce the total number of shares outstanding. The Company plans to transition from the pink sheet exchange to at least the OTC Bulletin Board exchange in the medium-term future. The reverse split is effective as of the date of this announcement, July 11, 2005. The Company is sending a letter to all shareholders regarding the reverse split.
Management at LifeHouse Retirement Properties, Inc. concentrates on delivering premier traditional and alternative services and products to its residents, with an emphasis on an "aging in place" quality and continuum of care. This is the next step in extending the company's mission and philosophy as it positions itself in the marketplace and extends its brand to new acquisitions. The LifeHouse approach will help advance the quality commitment and create a learning environment to effect continuous performance improvement in clinical processes to better meet the needs of residents. The Company will continue to strive for a holistic environment which provides independence, dignity, and choice in a resident-centered, employee-focused environment.
LifeHouse Retirement Properties, Inc. is a consolidator of senior assisted and independent living facilities in the U.S. The Company is focused on strategic acquisitions of health care properties by typically purchasing the distressed debt and delivering a robust turnaround strategy to stabilize follow-on acquisitions. The Company's platform provides a strong acquisition and operating team with significant experience in health care, hospitality, finance, construction and real estate, particularly effective in turnaround operations of under-performing properties or entire business units. QLHC currently owns five and leases two facilities in Michigan. The Company has approximately 553 units and 500 full-time and part-time employees.
Forward-Looking Statements: The information contained herein should not be construed as a recommendation to purchase any securities. Statements in this news release concerning the company's business outlook or future economic performance, anticipated profitability, revenues, expenses, or other financial items; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those contained in such statements. Such risks, uncertainties, and factors include, but are not limited to, future capital needs, changes and delays in development plans and schedules, acquisition risks, licensing risks, business conditions, competition, changes in interest rates, our ability to manage our expenses, market factors that could affect the value of our properties, the risks of downturns in general economic conditions, availability of financing for development and acquisitions. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Investments in small-cap companies are generally deemed to be highly speculative and to involve substantial risk, making it appropriate for readers to consult with professional investment advisors and to make independent investigations before acting on the information. Any investment in small-cap companies could prove to be high risk investments with the result in the loss of part, or the total principal investment.