Hartford Business.com
August 28, 2008
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A Georgia-based private equity firm has announced an $85 million deal to buy Haven Healthcare, the financially troubled operator of more than two dozen nursing homes in New England.
Formation Capital LLC of Alpharetta, Ga., said it has signed an agreement to purchase the Middletown, Conn., care provider, which runs 27 facilities in five states, including 15 in Connecticut.
Haven Healthcare filed for federal bankruptcy protection in November amid investigations by Connecticut officials into whether the company misused millions of dollars in Medicaid funds. The company denied the allegations.
Court filings indicate that at least $80 million from the sale will be used to pay off debts owed to Haven’s secured creditors.
“The acquisition of the Haven Healthcare facilities complements our portfolio of health care companies and our strategy to meet the growing need for skilled nursing services,” said Arnold Whitman, chief executive officer and co-chairman of Formation Capital.
Genesis HealthCare of Kennett Square, Pa., will manage and operate the facilities on behalf of Formation Capital and Senior Care Development LLC.
No Cuts Planned
Richard Blinn, regional president of Genesis, said a federal bankruptcy judge must approve the deal. He expected the purchase to be finalized and his company to be running the Haven properties by Aug. 1.
“Genesis has a strong record of delivering high-quality care,” he said. “We’re looking forward to working with and supporting all the dedicated staff members of the Haven Healthcare facilities.”
Blinn said there was no plan for staffing or service cuts. He said one of Genesis’ first tasks will be assessing the buildings and their maintenance needs. Haven logos will be replaced with those of Genesis, he added.
Genesis HealthCare runs more than 200 skilled nursing centers and assisted living residences in 13 eastern states. It also supplies contract rehabilitation therapy to more than 700 health care providers in 20 states and Washington, D.C.
Haven Healthcare’s financial troubles were tied to actions by Chief Executive Officer Ray Termini, according to John F. McCormick, audit manager for the state Department of Social Services.
State officials found that Termini used millions of dollars in assets from nursing home businesses for “personal investments,” including a record company, a lakefront house in Middlefield and a $1.5 million yacht. Those officials alleged that Haven Healthcare allowed its nursing homes’ bills to go unpaid while Termini used company funds to launch a Nashville record label, Category 5.
Category 5’s top star, country singer Travis Tritt, is suing the label and is seeking $10 million in damages, accusing Termini of misrepresentation.
Termini has acknowledged that he used some Haven assets to finance the record label, but said none of the money came from Medicaid or Medicare payments.
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