Sunwest Management

The Blackstone / Emeritus Joint Venture will become the stalking horse bidder in a bankruptcy auction that is scheduled for May 17. The pending sale was approved by US District Court Judge Michael Hogan.

The transaction will include a combination of cash, securities, and assumption of debt. The Blackstone / Emeritus Joint Venture will purchase most of the assets of the consolidated Sunwest enterprise. Existing investors and other claimants in the bankruptcy estate will be permitted to exchange their claims for either cash or up to 49% of the units in the venture.

Sunwest chief restructuring officer Clyde Hamstreet calls the Hogan's decision "a very promising transaction for Sunwest's investors and other creditors of the bankruptcy estate." He says that Hogan, "employed an effective mediation strategy, using [retired Lane County Circuit Court Judge] Lyle Velure as mediator, to resolve most of the financial and legal complexities and disputes."

Hamstreet says that the approach allowed hundreds of Sunwest entities that were on the verge of liquidation to be consolidated into a single viable business. "That act alone created significant value for the estate to the benefit of investors, lenders, and other creditors," Hamstreet said in a prepared statement.

The Court selected the Blackstone / Emeritus Joint Venture as stalking horse bidder over a competing proposal from AEW Capital Management, which sought to make a preferred investment in the reorganized company. The two proposals were presented to the Court by Hamstreet, receiver Michael Grassmueck and a committee representing investors. Earlier in March, the Court appointed an independent expert, Bettina Whyte of Bridge Associates, LLC, to facilitate final negotiations with both Blackstone and AEW and assist in evaluating the competing proposals.

The court approved bid procedures to govern an upcoming six week bidding period, and is expected to appoint an investment banker to advise the estate during the bidding and auction process. As lead bidder, the Blackstone / Emeritus Joint Venture will have customary overbid protection and will receive break-up fees if another bidder makes the highest and best bid at the auction. Closing of the sale will be subject to customary conditions, confirmation of Sunwest's plan of reorganization, completion of loan modifications, and transfers of operating licenses. Closing is expected to occur in July.

Instant Insights /

Court Approves $1.3B Bankrupt Sunwest Sale

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