PACS Group (which operates 314 communities across 17 states), Truist Bank, and PACS’ lenders entered into forbearance agreements on Wednesday, August 13. This is the fifth change to the agreements. Deficiencies in financial reporting across multiple periods resulted in defaults under its master lease with Omega Healthcare Investors, which triggered related defaults under the company’s credit agreement.
Truist and the lender group agreed to hold off on taking action over the defaults until October 31, 2025, with the option to extend that deadline to November 30 or longer if they choose. The landlords under the Omega Master Lease also agreed to pause enforcement during this same period. But, the deal could end earlier if certain events spelled out in the agreement occur.
During the forbearance period, PACS must comply with certain conditions. It must keep at least $100 million in cash on hand, is limited in investments and acquisitions, and cannot take out new loans under the credit agreement. The deal also gives PACS more time (until the end of the forbearance period) to deliver its audited financial statements for the fiscal year ended December 31, 2024, through the end of the forbearance period. For the agreement to take effect, the company must pay back certain loans and cover a forbearance fee. No other details on the forbearance agreements were disclosed in PACS’ 8-K.
On August 15, a couple of days after PACS entered the agreement, Peter Sanford, the President of Providence Administrative Consulting Services, Inc. (a PACS subsidiary), resigned, effective that day. Sanford will remain available to provide consulting services to the company for up to 12 months.
