SRZ: May 4, Sunrise Announces Overhead Cost Reduction/Downsizing Plan and German Community Sale!!.

SRZ has made an 8k filing with regards to downsizing.



- Eliminating 150 positions which would save 20 million in annual recurring expenses.
- Downsizing would help SRZ's centrally administered services expenses would be reduced by approximately $1.5 million.
- Richard Nadeau employment is terminated for "other than for Cause" Richard will receive 2 years base salary + 75% of target bonus + accelerated vesting of Mr Nadeau's unvested equity awards.
- April 29 & April 30, 2009 SRZ entered into standstill agreement with lenders of 7 German communities and Hoesel land.

• SRZ also entered into standstill agreement with NATIXIS London branch with respect to Sunrise Hannover, Munich and Konigstein communities untill the earliest of occurance of certain events related to loan or May 31,2009.
• SRZ also entered into standstill agreement with Capmark Finance Inc with respect to Sunrise Villa Camphausen, Reinbeck, Oberursel and Frankfurt communities until occurance of certain events relating to loan or May 31,2009.
• SRZ entered into standstill agreement with HSH Nordbank AG with respect to Sunrise land in Hoesel until Sept 30,2009 unless revoked by HSH Nordbank upon certain events, which revocation would be effective on June 30,2009.
• SRZ entered into standstill agreement with Barclays Bank PLC remain in effect until the occurance of certain events related to the loans or June 30,2009.

My views: Its a good package for Richard for sure. It does help SRZ in some ways as the option expenses can be done at the now low price of $2.70 instead of the 1 year down the line SRZ stock price of $ 5-10.
Elimination of 150 posts will result in reduction of overhead expenses of non consolidated communities and make the communities profitable (hopefully) which would also help as SRZ would not have to invest in performance guarantee.
- SRZ has entered into standstill agreements with lenders of German communities. SRZ has stated in previous news releases its intention of sale of german assets. This 8k filing gives us an indication of timelines of the said sales. Most of these asset sales are by May 31,2009 through June 30,2009. So we should hear more news updates from SRZ about these asset sales. [Quite possible that there is no public announcement just like there has been no public announcement of the sale of 10% stake in UK communities for a profit of 19 million in Q1 2009]
Richard Nadeau will be leaving by June 15,2009 so most of these deals should be complete by June 15,2009.
Goodbye Richard!.. Thanks for all the help, last but not the least enjoy the millions for all the hardwork and bringing SRZ back to ship shape. You earned it!!
PN: These are my interpretation of the information available in the 8k filing. Original 8k filing document is available here