Sonida Senior Living (NYSE: SNDA) on Wednesday announced a debt restructuring and an equity infusion, as well as new leadership appointments. The effort will help the company’s short-term cash flow and is another step toward long-term stabilization, CEO Brandon Ribar told Senior Housing News. 

The restructuring was forecasted earlier this year by Sonida leadership in a bid to strengthen the company in the short-term, and make it more attractive to future investment.

“Our goal is to pair a flexible, stable balance sheet with strong operating performance to provide an attractive transaction partner to lenders, JV partners, and shareholders,” Ribar said in an email to SHN.

In March, Sonida issued a going concern warning related to debt maturities, cost inflation, elevated interest rates and the continued impact of the Covid-19 pandemic. That caused the company’s stock value to dip by one-third before leveling.

With the initial phase of the debt restructuring complete, the effort covers 49 assets financed via Fannie Mae and Ally Bank.

The new agreement with Fannie Mae results in approximately $40 million of additional free cash flow over the next three years, and an initial forbearance period is the first in a two-step process to modify all existing mortgage agreements with Fannie by 3Q23. Sonida and Fannie agreed to “exercise commercially reasonable efforts” to enter into a loan agreement on or before Sept. 30 of next year.

The loan modifications provide Sonida with “additional financial flexibility” to further build out its operations and pursue strategic growth, a release on the announcement states.

During the company’s first quarter earnings call in May, Ribar said Sonida was aiming to create a “more attractive debt profile.”

“Our goal is to present Sonida as a primary transaction partner in the near term,” Ribar said during the 1Q23 earnings call in May.

Through the forbearance period, Sonida will make reduced debt service payments to account for the loan modification. The company recently made a $5 million payment to apply to existing loan balances.

Details of the restructure show maturities extend to December 2026 or beyond and principal payments will be deferred for three years. Sonida will receive near-term interest rate reduction on all 37 assets, resulting in $6.1 million in cash interest savings over the next 12 months.

In terms of the Ally Bank component of the restructure, the bank has agreed to temporarily reduce the minimum liquidity requirement under its $88.1 million facility for 18 months subject to certain conditions that Sonida expects to meet, according to the press release.

Conversant Capital, Sonida’s largest shareholder, purchased common equity at $10 per share, representing a 30% premium, and a total of up to $13.5 million.

“We believe Conversant’s continued commitment to the platform from an equity perspective also highlights investor confidence in our ongoing operational performance and growth profile,” Ribar added.

Also on Wednesday, Sonida announced several leadership appointments and promotions.

Carole Burnell, Dawn Mount and Donna Brown were appointed earlier this year as vice presidents of operations, each running one of the Sonida’s three geographic operating regions. Reanae Clark has joined as vice president of business development and acquisitions. Michael Karicher joined as chief people officer and Jay Reed was promoted to chief technology officer.

The post Sonida CEO: Debt Restructure Adds Flexibility, Pathway to Further Stabilization appeared first on Senior Housing News.