CALGARY, Sept. 26 /CNW/ - Continuum Health Care Inc. (TSXV-CCF)
("Continuum") is pleased to announce that it and its wholly-owned subsidiary,
Continuum Health Care Holdings Ltd. ("Holdings"), have commenced the
financing, planning, development and marketing of a 68-unit seniors supportive
living facility in Drayton Valley, Alberta (the "Drayton Valley Facility"),
together with Vantage West Development Corp. ("Vantage") and Sunrise Village
(Drayton) Joint Venture ("Drayton Joint Venture"). Continuum and Holdings have
also commenced the financing, planning, development and marketing of a
122-unit designated assisted living and supportive living facility in Camrose,
Alberta (the "Camrose Facility"), together with Vantage and Sunrise Village
(Camrose) Joint Venture ("Camrose Joint Venture"). Vantage is owned by three
of the directors of Continuum, namely Patrick Hovan, Peter Allan and Evan
Welbourn. Continuum has received regulatory approval from the TSX Venture
Exchange and shareholder approval at Continuum's last annual general meeting
held on June 13, 2008 for theses non-arm's length transactions.
Summary of the Drayton Valley Project
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The lands to be developed for the Drayton Valley Facility are to be owned
by a joint venture between Vantage and Eldercare (Drayton) Limited
Partnership. The joint venture is called the Sunrise Village (Drayton) Joint
Venture ("Drayton Joint Venture"). The general partner of the Eldercare
(Drayton) Limited Partnership is Evan Welbourn, a director of Continuum. The
Drayton Joint Venture will own the Drayton Valley Facility through a trustee
company, Sunrise Village (Drayton) Holdings Ltd. (the "Trustee") The
respective interests of Vantage and Eldercare (Drayton) Limited Partnership,
as the joint venturers, will be determined based upon their respective
contributions to the Drayton Joint Venture.
The Drayton Valley Facility shall be developed under a Project Management
Agreement between Vantage and the Trustee, which covers the planning, design,
procurement and construction management services to be completed by Vantage
for a specified fee of $236,693.00.
Under an exclusive Option Agreement, Vantage will grant to Holdings an
option to acquire Vantage's interest in the Drayton Joint Venture in
consideration for a loan of funds made by Holdings to Vantage under a separate
Loan Agreement described below. As additional consideration for the Option
Agreement, Continuum will provide guarantees on the construction financing for
the Drayton Valley Facility. The term of the option will be 48 months. The
right of Holdings to exercise the option is contingent upon occupancy of the
Drayton Valley Facility being at or above 85% for three consecutive months.
The price payable by Holdings for the exercise of the option is the aggregate
of the actual cost contributed by Vantage to the Drayton Joint Venture, plus
five (5%) percent of the total of all capitalized costs of the Drayton Valley
Facility, less the principal amounts advanced to Vantage from Holdings
pursuant to the Loan Agreement described below. Should the option be
exercised, Holdings would replace Vantage as a participant in the Drayton
Joint Venture.
Under a Loan Agreement, an amount up to $1, 396,508.00 is to be advanced
by Holdings to Vantage to assist with the capital cost of the Drayton Valley
Facility. The loan is to be funded by Holdings from the grant provided to
Holdings by the Alberta Government through Alberta Seniors and Community
Supports, under the Affordable Supportive Living Initiative ("ASLI"). Interest
will accrue under the Loan Agreement at the rate of 6% per annum, and become
due on the earlier of four years from the date of the Loan Agreement or thirty
days following the date of exercise of the option under the Option Agreement.
Should the option be exercised by Holdings, the principal amount owing by
Vantage to Holdings under the Loan Agreement would be subtracted from the
exercise price of the option and such would constitute repayment by Vantage,
and any accrued interest otherwise owing by Vantage under the Loan Agreement
would be forgiven.
Under a Facility Management Agreement between Continuum and the Trustee,
Continuum shall be the sole and exclusive managing agent of the Drayton Valley
Facility and shall also provide marketing and lease-up services. The Trustee
will pay to Continuum a fee of $5,666.67 per month until date the first tenant
occupies a unit in the Drayton Valley Facility, not to exceed $68,000 in the
aggregate.
