Extendicare REIT
TSX : EXE.UN

Extendicare REIT

June 11, 2007 08:01 ET

Extendicare REIT Announces Agreement to Sell Crown Life Holding

MARKHAM, ONTARIO--(Marketwire - June 11, 2007) - Extendicare Real Estate Investment Trust ("Extendicare" or "Extendicare REIT") (TSX:EXE.UN) announced today that it has entered into an agreement with the Canada Life Assurance Company (Canada Life) pursuant to which it will receive for its approximate 35% equity interest in Crown Life Insurance Company (Crown Life) aggregate consideration of approximately $85 million which will consist of approximately $66 million in cash and the balance in securities. The consideration will be received by way of a Crown Life cash and asset dividend and a cash payment from Canada Life for the shares of Crown Life. The consideration is subject to a post closing adjustment to take into account the earnings of Crown Life from March 31, 2006 to the closing date, compared to the estimated earnings used for purposes of the closing and certain negotiated balance sheet amounts used for purposes of the closing, and the actual amounts to be determined within 75 days after closing including the differences in values of investments which are not allocated to policy liabilities, accrued interest on certain investments and certain insurance liabilities.

Under the agreement, Extendicare is responsible for certain possible specified contingent claims against Crown Life of up to approximately $19.1 million and in support of such claims, will deliver letters of credit in such amount. Depending on the type of contingent liability, the letters of credit will have various terms from 5 to 15 years. Based upon the assessment of Crown Life senior management, Extendicare's senior management has concluded that Extendicare's aggregate liability for such claims will be in the range of $3.5 to $7.0 million.

Subject to usual Canadian and U.S. regulatory approvals, the transaction is expected to close by mid July 2007.

Extendicare has also entered into an agreement with HARO Financial Corporation (HARO) pursuant to which it will sell to HARO its interests in certain securities it receives on the Crown Life dividend and will purchase from HARO its interests in certain securities that HARO receives on the Crown Life dividend. As a result of this purchase and sale of securities, Extendicare will receive net cash proceeds of approximately $15 million.

About Us

Extendicare Inc., an indirect wholly owned subsidiary of Extendicare REIT, is a major provider of long-term care and related services in North America. Through its subsidiaries, Extendicare Inc. operates 234 nursing and assisted living facilities in North America, with capacity for almost 26,900 residents. As well, through its operations in the United States, Extendicare Inc. offers medical specialty services such as subacute care and rehabilitative therapy services, while home health care services are provided in Canada. Extendicare Inc. employs approximately 33,100 people in North America.

Forward-looking Statements

Information provided by Extendicare REIT from time to time, including this release, contains or may contain forward-looking statements concerning anticipated financial events, results, circumstances, economic performance or expectations with respect to Extendicare REIT and its subsidiaries, including its business operations, business strategy, and financial condition. Forward-looking statements can be identified because they generally contain the words "expect", "intend", "anticipate", "believe", "estimate", "plan" or "objective" or other similar expressions. Forward-looking statements reflect management's beliefs and assumptions and are based on information currently available, and Extendicare REIT assumes no obligation to update any forward- looking statement. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Extendicare REIT to differ materially from those expressed or implied in the statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on Extendicare REIT's forward-looking statements. Further information can be found in the disclosure documents filed by Extendicare REIT with the securities regulatory authorities, available at www.sedar.com and on Extendicare REIT's website at www.extendicare.com.

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