Under the preliminary agreement between Blackstone and Sunwest, Sunwest would proceed with the plan of distribution currently pending before the U.S. District Court in Eugene, Ore., in the lawsuit filed last March by the Securities and Exchange Commission (SEC). The court will consider the receivership plan at the end of this month. If it approves that plan, the court would subsequently consider the Blackstone transaction in conjunction with Sunwest's reorganization in Chapter 11 towards the end of this year.

In making its offer, Blackstone is partnering with Emeritus Senior Living, one of the nation's largest senior living providers managing 309 communities in 36 states, and Columbia Pacific Management, Inc., an entity controlled by Dan Baty, Chairman and Co-CEO of Emeritus. Under the terms of the proposal, Emeritus would be appointed as manager of the newly-acquired facilities once the transaction is complete. Emeritus will also have the option to invest up to 10% of the equity in the joint venture entity along with Blackstone and Columbia Pacific.

The offer depends on the continuation of the restructuring that is currently in progress under the leadership of Clyde Hamstreet, chief restructuring officer (CRO), and federal receiver Michael Grassmueck, who was appointed last March after the SEC filed its lawsuit. If approved by the court, the transaction would close at the time the Sunwest Chapter 11 plan becomes effective.

The distribution and draft reorganization plans filed with the court in August will be revised to allow for a transaction of this nature to occur. At the same time, Sunwest's receiver and CRO are proceeding with the "stand-alone" restructuring in the event a sale transaction does not occur. Both the distribution plan and the sale transaction must be approved by the U.S. District Court in Eugene, Ore., where the SEC case is being heard.

"This purchase offer by Blackstone, one of the world's premier private equity firms, validates the hard work of a lot of people," said CRO Clyde Hamstreet. "It recognizes the effort and dedication of our employees and the quality care and services they provide to our residents.