SOURCE: Sun Healthcare Group, Inc.

December 01, 2008 18:00 ET

Sun Healthcare Group, Inc. Resets Interest Rate on $154 Million of Bank Term Loans at 4.1 Percent

IRVINE, CA--(Marketwire - December 1, 2008) - Sun Healthcare Group, Inc. (NASDAQ: SUNH) today announced that variable interest rates on $154.4 million of its outstanding bank term loans were reset in late Nov. 2008 at an average nominal rate of 4.13 percent. The variable interest rates are based on LIBOR plus a spread of 200 basis points. Interest rates can generally be reset for periods of one month to six months.

At Nov. 30, 2008, the outstanding bank term loans, which mature on April 19, 2014, aggregated $347.0 million. Sun had previously fixed interest rates through July 2010 on $150.0 million of the term loans at an average nominal interest rate of 6.81 percent through interest rate swap arrangements. As a result, at Nov. 30, 2008, the average nominal rate for the outstanding term loans, including the recent reset, is 5.47 percent.

Sun is required to make scheduled principal payments on the term loans equal to $3.5 million annually. In addition, Sun is also required to make a mandatory prepayment out of excess cash flow in the first quarter of each year. Although the amount of that prepayment cannot be calculated before year-end financial statements have been prepared, management anticipates that these payments will be made with existing cash on hand. After the prepayment, Sun's ratio of net indebtedness to EBITDA is expected to be below 4 to 1. Sun has no other significant debt maturities in 2009 or 2010.

About Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc., with executive offices in Irvine, California, owns SunBridge Healthcare Corporation and other affiliated companies that operate long-term and postacute care facilities in many states. In addition, the Sun Healthcare Group family of companies provides therapy through SunDance Rehabilitation Corporation, hospice services through SolAmor Hospice and medical staffing through CareerStaff Unlimited, Inc.

Statements made in this press release concerning future events are not historical facts and are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as "anticipate," "believe," "plan," "estimate," "expect," "hope," "intend," "may" and similar expressions. Factors that could cause actual results to differ are identified in the public filings made by the company with the Securities and Exchange Commission and include changes in Medicare and Medicaid reimbursements; our ability to maintain the occupancy rates and payor mix at our long-term care centers; potential liability for losses not covered by, or in excess of, our insurance; the effects of government regulations and investigations; the significant amount of our indebtedness, covenants in our debt agreements that may restrict our activities and our ability to incur more indebtedness; increasing labor costs and the shortage of qualified healthcare personnel; our liquidity; and our ability to receive increases in reimbursement rates from government payors to cover increased costs. More information on factors that could affect our business and financial results are included in our public filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Forms 10-Q, copies of which are available on Sun's web site,

The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. We caution investors that any forward-looking statements made by Sun are not guarantees of future performance. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.

EBITDA is used in this press release and is a non-GAAP financial measure. EBITDA is defined as earnings before income (loss) on discontinued operations, income taxes, loss (gain) on sale of assets, net, interest, net, depreciation and amortization. EBITDA is used by management and our lenders to evaluate financial performance for Sun as a whole. EBITDA is commonly used as an analytical indicator within the healthcare industry and also serves as measures of leverage capacity and debt service ability. EBITDA should not be considered as a measure of financial performance under generally accepted accounting principles.

Any documents filed by Sun with the SEC may be obtained free of charge at the SEC's web site at In addition, investors and stockholders of Sun may obtain free copies of the documents filed with the SEC by contacting Sun's investor relations department at (505) 468-2341 (TDD users, please call (505) 468-4458) or by sending a written request to Investor Relations, Sun Healthcare Group, Inc. 101 Sun Avenue N.E., Albuquerque, N.M. 87109. You may also read and copy any reports, statements and other information filed by Sun with the SEC at the SEC public reference room at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 or visit the SEC's web site for further information.

Contact Information

  • Contact:

    Investor Inquiries
    (505) 468-2341

    Media Inquiries
    (505) 468-4582