SOURCE: Sun Healthcare Group, Inc.

April 19, 2007 16:44 ET

Sun Healthcare Group, Inc. Announces Completion of the Acquisition of Harborside Healthcare Corporation and Execution of New Credit Facilities

IRVINE, CA -- (MARKET WIRE) -- April 19, 2007 -- Sun Healthcare Group, Inc. (NASDAQ: SUNH) announced that it completed its previously announced acquisition of Harborside Healthcare Corporation on April 19, 2007. Harborside is a privately held healthcare company based in Boston, Massachusetts that operates 73 skilled nursing facilities, one assisted living facility and one independent living facility with approximately 9,000 licensed beds in 10 states.

Sun paid $349.4 million in cash for the equity of Harborside and refinanced or assumed Harborside's debt. In connection with the acquisition of Harborside, Sun entered into a $485 million new senior secured credit facility with a syndicate of financial institutions lead by Credit Suisse as the administrative agent and collateral agent. The proceeds from the new credit facility, plus cash on hand at Sun and Harborside and the net proceeds from Sun's issuance of $200 million aggregate principal amount of 9-1/8 percent Senior Subordinated Notes due 2015, were used to pay the purchase price for the equity of Harborside, refinance certain of the debt of Harborside and replace Sun's prior revolving credit facility. The new credit facility, which provides for an initial interest rate of Libor plus two percent, will also provide funds for previously exercised options relating to the purchase of nine skilled nursing centers, as well as additional liquidity for Sun.

"We are pleased to announce the completion of the acquisition of Harborside Healthcare Corporation. Having completely deconstructed and reconstructed Sun's asset base during the last five years, management believes it now has a strong platform with which to grow the company organically and without dependence on additional acquisitions to achieve competitive margins," said Rick Matros, chairman and chief executive officer Sun Healthcare Group, Inc.

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 centers 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 release that are not historical facts 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; potential liability for losses not covered by, or in excess of, our insurance; the effects of government regulations and investigations; our ability to generate cash flow sufficient to operate our business; our ability to integrate the operations of Harborside Healthcare Corporation; increasing labor costs and the shortage of qualified healthcare personnel; 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 Form 10-Q, copies of which are available on Sun's web site, www.sunh.com.

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.

Any documents filed by Sun with the SEC may be obtained free of charge at the SEC's web site at www.sec.gov. 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 on its public reference room.

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