Brookdale Announces Election of Early Settlement of its Purchase Contracts

Rhea-AI Summary

Brookdale Senior Living (NYSE: BKD) has announced its decision to exercise early settlement rights for all prepaid stock purchase contracts, which are components of the 7.00% tangible equity units issued on November 21, 2022. On March 31, 2025, the company will issue 12.9341 shares of common stock per purchase contract, subject to holder conditions.

The settlement calculation is based on the 20-day volume-weighted average stock price ending March 26, 2025. The last trading day for tangible equity units is March 28, 2025. Holders have until April 23, 2025, to require Brookdale to repurchase their notes with accrued interest.

Brookdale operates 647 senior living communities across 41 states, serving approximately 58,000 residents as of December 31, 2024. The company provides independent living, assisted living, memory care, and continuing care retirement communities.

Positive

• Large operational scale with 647 communities across 41 states
• Significant resident capacity of approximately 58,000
• Strategic early settlement of purchase contracts indicates financial management initiative

Negative

• Potential dilution of existing shareholders due to issuance of 12.9341 new shares per purchase contract
• Early repurchase obligations may impact company's cash position

Insights

Financial Analyst

Brookdale's decision to exercise its early settlement right for purchase contracts from its 2022 tangible equity units (TEUs) represents a significant capital structure event. Based on the settlement formula, Brookdale will issue 12.9341 shares of common stock for each purchase contract on March 31, 2025.

This transaction will result in dilution for existing shareholders, though the exact magnitude depends on the number of outstanding purchase contracts, which isn't specified in the release. The settlement price is based on the 20-day VWAP ending March 26, suggesting the company views current price levels as acceptable for conversion.

Additionally, TEU holders can require Brookdale to repurchase their notes (the other component of the TEUs) by April 23, which could impact the company's cash position depending on how many holders exercise this option. The original TEUs had a 7.00% yield, issued in November 2022 when interest rates were rising.

This early settlement appears to be a strategic financial decision to address these securities ahead of their scheduled settlement. With Brookdale operating 647 communities across 41 states serving approximately 58,000 residents, this capital structure management represents normal corporate finance activity rather than a signal of financial distress or exceptional opportunity.

NASHVILLE, Tenn., March 27, 2025 /PRNewswire/ -- Brookdale Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") today announced that it has elected to exercise its right to settle all of its prepaid stock purchase contracts, pursuant to the early settlement right in the purchase contract agreement. The purchase contracts are part of the 7.00% tangible equity units issued by Brookdale on November 21, 2022 (CUSIP No. 112463 302, NYSE: BKDT). Each tangible equity unit is also comprised of a senior amortizing note due November 15, 2025. The last day of trading of the tangible equity units is March 28, 2025.

On March 31, 2025, subject to satisfaction of the conditions set forth in the purchase contract agreement by each holder of the purchase contracts, the Company will issue 12.9341 shares of its common stock for each purchase contract, plus any cash payable in lieu of fractional shares to such holder. The settlement is based upon the average of the daily volume-weighted average price per share of the Company's common stock on the New York Stock Exchange for the 20 consecutive trading days ending on March 26, 2025. On or before April 23, 2025, holders of tangible equity units or previously separated notes may also require the Company to repurchase their notes, plus any accrued and unpaid interest, subject to the holders satisfaction of the conditions set forth in the indenture governing such notes.

A Notice of Election of Early Settlement was issued to the holders of tangible equity units and to the holders of any previously separated purchase contracts and notes on March 27, 2025.

This press release does not constitute an offer to sell or buy or the solicitation of an offer to buy or sell any security and shall not constitute an offer, solicitation, sale or purchase of any securities in any jurisdiction in which such offering, solicitation, sale or purchase would be unlawful.

ABOUT BROOKDALE SENIOR LIVING

Brookdale Senior Living Inc. is the nation's premier operator of senior living communities. With 647 communities across 41 states and the ability to serve approximately 58,000 residents as of December 31, 2024, Brookdale is committed to its mission of enriching the lives of seniors through compassionate care, clinical expertise, and exceptional service. The Company, through its affiliates, operates independent living, assisted living, memory care, and continuing care retirement communities, offering tailored solutions that help empower seniors to live with dignity, connection, and purpose. Leveraging deep expertise in healthcare, hospitality, and real estate, Brookdale creates opportunities for wellness, personal growth, and meaningful relationships in settings that feel like home. Guided by its four cornerstones of passion, courage, partnership, and trust, Brookdale is committed to delivering exceptional value and redefining senior living for a brighter, healthier future. Brookdale's stock trades on the New York Stock Exchange under the ticker symbol BKD.

SAFE HARBOR

Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding the Company's intent, belief, or expectations. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "could," "would," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "believe," "project," "predict," "continue," "plan," "target," or other similar words or expressions, and include statements regarding the Company's expected financial and operational results. These forward-looking statements are based on certain assumptions and expectations, and the Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although the Company believes that expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its assumptions or expectations will be attained and actual results and performance could differ materially from those projected. Factors which could affect the Company's forward looking statements include the risks detailed from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including those set forth in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect management's views as of the date of this press release. Except as required by law, the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained in this press release to reflect any change in the Company's expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.

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SOURCE Brookdale Senior Living Inc.

FAQ

What is the stock-to-contract conversion ratio for BKD's early settlement of purchase contracts?

Brookdale will issue 12.9341 shares of common stock for each purchase contract on March 31, 2025.

When is the last trading day for Brookdale's (BKD) tangible equity units?

The last trading day for the tangible equity units (BKDT) is March 28, 2025.

What options do BKD tangible equity unit holders have regarding their notes?

Holders can require Brookdale to repurchase their notes plus accrued interest on or before April 23, 2025.

How many senior living communities does Brookdale (BKD) currently operate?

Brookdale operates 647 communities across 41 states, serving approximately 58,000 residents as of December 31, 2024.