Continuum Health Care Inc. announces commencement of development of Drayton Valley and Camrose Facilities



    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
    -------------------------------------
    

    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. In addition, during the five year term of the Facility Management
Agreement, the Trustee will pay Continuum 5% of the total revenue from all of
the Drayton Valley Facility's operating departments per month (the "gross
revenue"), as well as 5% of net revenue (gross revenue less operating
expenses) per year.
    As the development of the Drayton Valley Facility proceeds, it is
contemplated that further financing will be required by the Drayton Joint
Venture and will be guaranteed by the joint venture parties and by Continuum.

    
    Summary of the Camrose Project
    ------------------------------
    

    The lands to be developed for the Camrose Facility are to be owned by a
joint venture between Vantage and Eldercare (Camrose) Limited Partnership. The
joint venture is called the Sunrise Village (Camrose) Joint Venture ("Camrose
Joint Venture"). The general partner of the Eldercare (Camrose) Limited
Partnership is Evan Welbourn, a director of Continuum. The Camrose Joint
Venture will own the Camrose Facility through a trustee company, Sunrise
Village (Camrose) Holdings Ltd. (the "Trustee"). The respective interests of
Vantage and Eldercare (Camrose) Limited Partnership, as the joint venturers,
will be determined based upon their respective contributions to the Camrose
Joint Venture.
    The Camrose 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 $412,250.00.
    Under an exclusive Option Agreement, Vantage will grant to Holdings an
option to acquire Vantage's interest in the Camrose 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 Camrose Facility. The term of the option will be 48 months. The right of
Holdings to exercise the option is contingent upon occupancy of the Camrose
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 Camrose Joint Venture, plus five (5%) percent of
the total of all capitalized costs of the Camrose 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 Camrose Joint Venture.
    Under a Loan Agreement, an amount up to $2,444,310.00 is to be advanced
by Holdings to Vantage to assist with the capital cost of the Camrose
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 Rural Affordable Supportive Living program ("RASL").
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 Camrose
Facility and shall also provide marketing and lease-up services. The Trustee
will pay to Continuum a fee of $8,714.28 per month until date the first tenant
occupies a unit in the Camrose Facility, not to exceed $122,000 in the
aggregate. In addition, during the five year term of the Facility Management
Agreement, the Trustee will pay Continuum 5% of the total revenue from all of
the Camrose Facility's operating departments per month (the "gross revenue"),
as well as 5% of net revenue (gross revenue less operating expenses) per year.
    As the development of the Camrose Facility proceeds, it is contemplated
that further financing will be required by the Camrose Joint Venture and will
be guaranteed by the joint venture parties and by Continuum.

    
    Business Reasons and Anticipated Effect on Continuum
    ----------------------------------------------------
    

    Pursuant to each of these transactions, Holdings will provide a loan of
funds to Vantage for the development of the facility by a joint venture in
which Vantage is one of the two joint venture parties. In return, Holdings
will have an exclusive option to buy out Vantage's interest in the joint
venture, in certain events. Continuum will provide marketing, lease-up and
facility management services for the facilities. This transaction structure is
designed to protect Continuum from the majority of risks typically associated
with the construction and development of seniors supportive living facilities,
while allowing Continuum to maintain an exclusive right to purchase the
facilities on favourable terms. Continuum also benefits by receiving a
contract to provide the pre-leasing and operations management services for the
facility. This structure allows Continuum to focus on its intended role as a
seniors facility management company rather than as a development and
construction company. The payment rates under all of the agreements will be
determined based on current fair market value of the particular asset or
service. These transactions are part of the Continuum's strategic plan to
improve earnings and returns on common equity, and to enhance total assets by
means of expanding its operations in Alberta.

    Continuum owns, operates, manages and develops supportive living
facilities in Alberta. It currently owns and manages, with its joint venture
partners, 167 supportive living facility units in Olds, Lethbridge and
Wetaskiwin. Continuum has joint venture interests in another 95 units that are
currently under construction at the Wetaskiwin facility and at a project in
Ponoka. The facilities under development in Drayton Valley and Camrose will
add another 190 units. Continuum and its joint venture partners also plan to
commence development of a 120 unit facility in High River, Alberta in the near
future. These developments together will bring the total number of units
managed by Continuum up to 572 Units.
    Continuum is listed on the TSX Venture Exchange (TSXV-CCF) and has a
total of 17,854,283 common shares outstanding, 19,529,283 fully diluted.

    
    Forward-looking Statements
    --------------------------
    

    This press release contains forward-looking statements. More
particularly, this press release contains statements concerning anticipated
changes in Continuum's financial capital and anticipated development
activities.
    The forward-looking statements are based on certain key expectations and
assumptions made by Continuum, including expectations and assumptions
concerning the finalization and execution of the various transaction
agreements and the ability and willingness of all of the parties to proceed
with the development of the facilities as contemplated.
    Although Continuum believes that the expectations and assumptions on
which the forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because Continuum can
give no assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of factors and
risks. These include, but are not limited to: (a) risks associated with the
assisted and supportive living industry in general, (b) the ability and
willingness of operators, tenants, borrowers, joint venture partners and third
parties, as applicable, to meet and/or perform their obligations under various
contractual arrangements with Continuum, (c) Continuum's ability to
successfully implement its business strategy and its ability to identify,
finance, consummate and integrate acquisitions or investments, (d) the nature
and extent of future competition, (e) the extent of future or pending
healthcare and assisted living regulation, (f) increases in the costs of
borrowing, (g) the ability of the applicable operators and managers to deliver
high quality services and to attract residents, (h) changes in general
economic conditions, (i) Continuum's ability to pay down, refinance,
restructure and/or extend its indebtedness as it becomes due, and (j)
uncertainties resulting from potential delays or changes in plans with respect
to facility development, financing or expenditures. Many of these factors are
beyond the control of Continuum. Certain of these risks are set out in more
detail in Continuum's filings under applicable securities laws and can be
accessed at www.sedar.com.
    The forward-looking statements contained in this press release are made
as of the date hereof and Continuum undertakes no obligation to update
publicly or revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, unless so required by
applicable securities laws.

    
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.
    




For further information:

For further information: Continuum Health Care Inc., Mr. Patrick Hovan,
President and CEO, Phone: (403) 556-1971

Organization Profile

CONTINUUM HEALTH CARE INC.

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