The Carlyle Group is in talks to cede control of nursing home chain HCR ManorCare to landlord/creditor Quality Care Properties, as first reported by the NY Post and confirmed by Axios. Carlyle, which first bought the Toledo, Ohio-based company in 2007, may retain a tiny piece going forward, but all eyes right now are on avoiding bankruptcy. A variety of things have gone wrong here, including reimbursement headwinds and Carlyle pulling some cash out via a dividend that followed the 2010 sale/leaseback of ManorCare's real estate to QCR for $6.1 billion.
- Why its the BFD: For Carlyle, ManorCare has been a migraine almost from the start. Private equity vets might recall numerous labor union protests to the original deal, including one that interrupted Carlyle's David Rubenstein during a Wharton conference keynote. Plus, this was a mega-buyout completed just before the financial crisis. But all of that pales in comparison to the panic that some ManorCare residents and their families must be feeling right now, based on the NY Post suggestion that QCP "will likely ask regulators in Ohio, Pennsylvania, Florida and other states where it operates for permission to close some locations."