Market Overview

Five Star Senior Living Inc. Stockholders Approve Issuance of Stock to Senior Housing Properties Trust and Its Shareholders Effective January 1, 2020

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Five Star Obtains New $65 Million Senior Secured Credit Facility

Announces Intention to Effect One-for-10 Reverse Stock Split on
September 30, 2019

Five
Star Senior Living Inc. (NASDAQ:
FVE) today announced the results of
its 2019 Annual Meeting of Stockholders held yesterday where, among
other things, 83.9% of the shares voted were in favor of issuing Five
Star common stock to Senior Housing Properties Trust (NASDAQ:SNH) and
SNH's shareholders, in satisfaction of the condition to restructuring
Five Star's business arrangements with SNH, as previously announced.
Additional results from the annual meeting are outlined below in this
news release.

Katherine Potter, Five Star's President and Chief Executive Officer made
the following statement:

"With yesterday's vote, we reached an important milestone in completing
our transaction with SNH and, when taken in combination with the new $65
million credit facility announced today, we believe these actions
further solidify Five Star's long-term financial outlook."

"Our plan to complete a one-for-10 reverse stock split is designed to
bring Five Star into compliance with Nasdaq listing standards, while
allowing Five Star to target a broader group of investors, reduce
trading costs for investors and lower administrative costs for the
company."

As previously announced, pursuant to the transaction agreement regarding
the restructuring of Five Star's business arrangements with SNH,
effective January 1, 2020, the existing five master leases of 184 senior
living communities (19,979 living units) that are leased to Five Star
from SNH as well as the existing management agreements and pooling
agreements with SNH affecting 77 communities (10,135 living units) will
be terminated and replaced with new management agreements for all 261
senior living communities owned by SNH and operated by Five Star.
Simultaneous with the conversion, Five Star will issue common stock to
SNH and SNH's shareholders such that their ownership of Five Star will
be equal to approximately 34% and 51%, respectively, post issuance. At
the same time, SNH will reduce Five Star's indebtedness, if any, under
the $25 million short term credit facility provided by SNH to Five Star
in connection with the restructuring transaction, will assume certain of
Five Star's liabilities associated with the converted communities, or
make a cash payment to Five Star, all of which, in aggregate, will total
$75 million. There are currently no amounts outstanding under the SNH
credit facility.

Credit Facility

In addition, today Five Star announced it has reached agreement on a new
$65 million senior secured credit facility. The maturity date of the
facility is June 12, 2021, which can be extended for a one-year period
subject to certain conditions, including the payment of an extension
fee. The facility permits Five Star to elect Eurodollar rate advances,
which accrue interest at LIBOR plus 250 basis points, or base rate
advances, which accrue interest at a base rate plus 150 basis points. In
addition, in certain circumstances, maximum commitments and borrowings
under the facility may be increased to up to $165 million.

Citibank, N.A., and RBC Capital Markets are the Joint Lead Arrangers and
Joint Lead Bookrunners for the credit facility. Banks participating in
the credit facility are as follows:

Institution

 

Facility Title

Citibank, N.A. Administrative Agent
RBC Capital Markets Syndication Agent
Wells Fargo Bank, National Association Documentation Agent
PNC Bank, National Association Lender
UBS AG, Stamford Branch, LLC Lender
 

Reverse Stock Split

Five Star also announced its intention to effect a reverse stock split
of its issued and outstanding common stock at a ratio of one-for-10. The
reverse stock split is currently expected to take effect at
approximately 5:00 p.m. Eastern Time on September 30, 2019 (the
"Effective Time").

Accordingly, if the reverse stock split is completed at the Effective
Time, every 10 issued and outstanding shares of our common stock would
be converted into one share of common stock. As a result of the reverse
stock split, it is expected that the number of outstanding shares of
common stock will be reduced from 50,878,492 to 5,087,849 shares. No
fractional shares will be issued in connection with the reverse share
split. Instead, each stockholder that would otherwise be entitled to
receive a fractional share will instead be entitled to receive, in lieu
of such fractional share, cash in an amount equal to the relevant
percentage of the product of a fraction of a share, multiplied by the
closing price per share of our common shares, on a split-adjusted basis,
as reported by Nasdaq on September 30, 2019. It is expected that the
reverse stock split will bring Five Star in compliance with Nasdaq
listing standards.

Additional Annual Meeting Results

Additional results from Five Star's 2019 Annual Meeting of Shareholders
were as follows:

Bruce M. Gans, M.D. was re-elected as an Independent Director in Group
III. The final tabulation of the percentage of votes cast for this
Independent Director is as follows:

Independent Director

 

Percentage of Shares Voted For

Bruce M. Gans, M.D. 74.5%
 

Stockholders ratified the appointment of RSM US LLP as Five Star's
independent registered public accounting firm to serve for the 2019
fiscal year.

Proposal

 

Percentage of Shares Voted For

Ratification of Independent Auditors 94.1%
 

Five Star Senior Living Inc. is a senior living company that owns,
leases and manages senior living communities, including primarily
private pay independent and assisted living communities located
throughout the U.S. Five Star is headquartered in Newton, Massachusetts.

Warning Concerning Forward-Looking Statements

This press release contains statements that constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 and other securities laws. Also, whenever Five Star
uses words such as "believe", "expect", "anticipate", "intend", "plan",
"estimate", "will", "may" and negatives or derivatives of these or
similar expressions, Five Star is making forward-looking statements.
These forward-looking statements are based upon Five Star's present
intent, beliefs or expectations, but forward-looking statements are not
guaranteed to occur and may not occur. Actual results may differ
materially from those contained in or implied by Five Star's
forward-looking statements. Forward-looking statements involve known and
unknown risks, uncertainties and other factors, some of which are beyond
Five Star's control. For example:

  • Ms. Potter's statement in this press release that an important
    milestone in completing the previously announced transaction between
    Five Star and SNH has been reached as a result of the Five Star
    stockholder approval of the share issuances to SNH and SNH's
    shareholders may imply that the transaction will be completed.
    Pursuant to the terms of the transaction agreement, the restructuring
    transactions are not expected to be effective until January 1, 2020
    and remain subject to the satisfaction of other conditions, including
    certain regulatory approvals. Five Star cannot be sure that any or all
    of those conditions will be satisfied. Accordingly, the restructuring
    transactions may not become effective as of January 1, 2020, or at
    all, or the terms of the transactions may change;
  • The issuances of the shares of Five Star common stock to SNH and SNH's
    shareholders will require the effectiveness of a registration
    statement on Form S-1 to be filed by Five Star with the Securities and
    Exchange Commission, or SEC, to register the shares of Five Star
    common stock to be issued. The process of preparing the registration
    statement is time consuming and the time before the SEC declares the
    registration statement effective, if at all, is beyond Five Star's
    control. Accordingly, Five Star cannot be sure that the transaction
    agreement and the restructuring transactions will be completed within
    a specified time period or at all;
  • This press release states that the actions and events announced in
    this press release further solidify Five Star's long-term financial
    outlook. These statements may imply that Five Star will operate
    profitably in future periods and have adequate financial resources to
    fund its operations and pursue its business strategies and
    initiatives. However, Five Star's business is subject to various
    risks, including risks outside Five Star's control, and Five Star may
    not operate profitably in the future or have adequate financial
    resources to fund its operations and pursue its business strategies
    and initiatives.
  • The amount of available borrowings under Five Star's new senior
    secured credit facility is subject to Five Star having qualified
    collateral, which is primarily based on the value of the assets
    securing Five Star's obligations under the credit facility.
    Accordingly, the availability of borrowings under the credit facility
    at any time may be less than $65 million. Also, the availability of
    borrowings under the credit facility is subject to Five Star
    satisfying certain financial covenants and other conditions that it
    may be unable to satisfy;
  • Actual costs under Five Star's new senior secured credit facility will
    be higher than the base rate plus the applicable margin because of
    other fees and expenses associated with the credit facility;
  • Five Star's option to extend the maturity date of its new senior
    secured credit facility for one, one year period is subject to Five
    Star's payment of extension fees and meeting other conditions which
    may not be met;
  • Five Star's ability to increase the maximum commitments and borrowings
    under its new senior secured credit facility is subject to Five Star
    obtaining additional commitments from lenders, which may not occur;
  • This press release states that there are currently no amounts
    outstanding under Five Star's short term credit facility with SNH,
    which may imply that there will continue to be no amounts outstanding
    under this credit facility, including if and when the shares of Five
    Star common stock are issued to SNH and SNH's shareholders pursuant to
    the transaction agreement between Five Star and SNH. Five Star cannot
    be sure that there will continue to be no amounts outstanding under
    this credit facility or, as noted above, that the restructuring
    transactions will become effective as of January 1, 2020, or at all,
    including any reduction of Five Star's indebtedness, if any, under the
    credit facility with SNH at such time;
  • Five Star currently expects to effect a one-for-10 reverse stock split
    on September 30, 2019. However, this reverse stock split is subject to
    Five Star's Board of Directors taking action to cause this reverse
    stock split to occur, and Five Star is not obligated to effect this
    reverse stock split; as a result, this reverse stock split may not
    occur, may be delayed or accelerated, or its terms may change.
    Further, the benefits that Five Star expects may be achieved from the
    reverse stock split, if it occurs, may not be realized, including Five
    Star regaining and maintaining compliance with Nasdaq listing
    standards; if Five Star fails to regain and maintain compliance with
    Nasdaq listing standards, Nasdaq may initiate proceedings to delist
    Five Star's common shares from Nasdaq. In addition, the number of
    shares that Five Star estimates in this press release would be
    outstanding following the reverse stock split is based on the number
    of shares currently outstanding and does not give effect to cash paid
    in lieu of fractional shares; as a result, the number of Five Star
    common shares that will be outstanding following the reverse stock
    split, if it occurs, will likely differ from the estimated amount
    noted in this press release.

The information contained in Five Star's filings with the SEC, including
under "Risk Factors" in Five Star's periodic reports, or incorporated
therein, identifies other important factors that could cause Five Star's
actual results to differ materially from those stated in or implied by
Five Star's forward-looking statements. Five Star's filings with the SEC
are available on the SEC's website at www.sec.gov.

You should not place undue reliance upon forward-looking statements.

Except as required by law, Five Star does not intend to update or change
any forward-looking statements as a result of new information, future
events or otherwise.

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