This announcement details the latest in a series of actions taken by the Archdiocese to rebuild a firm fiscal foundation; Archdiocese to retain ownership of cemeteries, which will continue their mission with no perceptible change.
PHILADELPHIA , Sept. 26, 2013 (GLOBE NEWSWIRE) --
Contextual Background
This July, the Archdiocese of Philadelphia published audited financial statements for the fiscal year ended June 30, 2012. The financial statements disclosed a $39.2 million operating deficit for that period as well as several very significant and ongoing balance sheet liabilities that measure in the hundreds of millions of dollars.
Since his arrival in Philadelphia nearly two years ago, Archbishop Chaput has repeatedly expressed his commitment to financial transparency and prudent stewardship of the resources of the Archdiocese. Beginning last summer, a series of steps were taken to begin to remedy Archdiocesan fiscal challenges. The Archbishop's residence along with a property in Ventnor, New Jersey, were both sold to provide necessary immediate cash flow. Many other actions followed including a reduction of 25% of the workforce at the Archdiocesan Pastoral Center in order to stem the operating deficit. Additionally, an evaluation of various Archdiocesan real estate assets and operating entities was undertaken. This evaluation focused on assets that could potentially be used to remedy the unfunded balance sheet obligations. None of those measures were taken lightly, but all were essential to maintaining the presence of the Catholic Church in the Philadelphia region and the good works accomplished through its various ministries.
Background Regarding Today's Announcement
Among the operating entities evaluated was the Office of Catholic Cemeteries, which has been well managed for many years. Archbishop Chaput decided to pursue an outsourced management and leasing arrangement for the 13 Archdiocesan cemeteries located throughout the five-county Philadelphia region.
Today, the Archdiocese of Philadelphia announced that it has elected to enter into such an arrangement with StoneMor Partners L.P. (NYSE: STON ) via a 60-year term. StoneMor, headquartered in Levittown (Bucks County) is the second largest owner and operator of cemeteries in the nation. StoneMor currently owns and operates 277 cemeteries and 92 funeral homes in 27 states and Puerto Rico.
Financial and Other Important Details of the Transaction
Upon closing, subject to satisfaction of certain conditions precedent, StoneMor will provide an initial lease payment of $53 million to the Archdiocese. Since the cemeteries were pledged as collateral for the promissory note previously established for the Trust and Loan Fund, it is expected that $30 million from the initial payment will be used to lessen the previously disclosed $82 million unfunded liability in that fund. The balance will be used for previously disclosed unfunded liabilities for risk insurance and the priests' pension. The arrangement also calls for annual lease payments as follows:
- Years 6-20: annual lease payments of $1,000,000
- Years 21-25: annual lease payments of $1,200,000
- Years 26-35: annual lease payments of $1,500,000
Other key points included in the arrangement are as follows:
- The current perpetual care fund (approximately $30 million as of June 30, 2012) and all future earnings from the fund will remain with the Archdiocese. The Archdiocese intends to place such funds in a separate trust.
- StoneMor will be responsible for providing perpetual care, at its cost, over the term of the arrangement and will also be responsible for establishing a perpetual care fund for all of its sales of burial rights.
- All current full-time, year-round Archdiocesan cemetery employees will become StoneMor employees (see below for further details).
- Proceeds from any future land sales to third parties will be shared with 51% to the Archdiocese and 49% to StoneMor.
- While it is expected that the arrangement will run through its term, both parties can terminate for cause and the Archdiocese can terminate without cause during the 11 th year of the arrangement.
This strategic, landmark arrangement is the latest in a series of actions taken by the Archdiocese of Philadelphia to help restore a solid financial foundation. It is part of the ongoing Archdiocesan effort to build the strongest possible Catholic Church in Philadelphia—one that will be sustainable now and far into the future.
"This arrangement serves the people of the Archdiocese of Philadelphia well by maintaining our cemeteries as sacred, dignified places of burial while offering employment and important protections for our dedicated staff," said Archbishop Charles J. Chaput, O.F.M. Cap. "This is not a decision I came to lightly. It is being entered into only after significant discussion, consideration, prayer and approval by the Holy See. It allows us to retain ownership of the Catholic Cemeteries while creating immediate and long-term benefits to help us rebuild a strong financial footing. StoneMor is a local company with a deep experience in the management of cemeteries. This factor, combined with their willingness to maintain the Catholic identity of our cemeteries, made them the logical choice.
"As I've said many times before, I'm committed to continuing an open and honest dialogue regarding our financial condition and the steps we take to fix it. With a stronger, more stable financial position, we will be able to best fulfill the Church's mission of evangelization and service to all those in need."
StoneMor Brings Local Roots, National Expertise to Cemeteries; Maintains Catholic Values & Sacred Duty of Providing Dignified Burials for the Faithful Departed
Larry Miller, President and Chief Executive Officer of StoneMor Partners commented, "We are delighted with this transaction. The 13 cemeteries we will be managing have performed a combined average of about 7,000 burials per year. In terms of providing services to so many families per year, this transaction marks the second largest enterprise we have taken on since becoming public in 2004. As with previous transactions, we will be bringing to each property our unique expertise in offering and managing pre-need planning for families. StoneMor has been successful to date effectively transitioning management and operations of properties that are new to our portfolio, and we anticipate a continuation of that trend here.
"Although there will be a change in management," continued Miller, "all 13 Catholic cemeteries will continue to be owned by the Archdiocese throughout the term of the arrangement. Operations will be conducted in a manner consistent with Catholic values and the core mission of the cemeteries. The cemeteries will continue to carry out the sacred duty of providing dignified Catholic burials for the faithful departed according to all current practices and policies. There will be no perceptible change for visitors to the cemeteries or individuals seeking to provide burial space for themselves or their loved ones. We will also provide a level of care for the properties consistent with historical practices. It should be noted that parish cemeteries will not be affected as they are operated at the local level and are not part of this arrangement."
Cemeteries Included in the Arrangement
The following is a list of cemeteries that are included in the outsourced management and lease arrangement with StoneMor: All Souls Cemetery, Coatesville (Chester County); Calvary Cemetery, West Conshohocken (Montgomery County); Cathedral Cemetery, Philadelphia; New Cathedral Cemetery, Philadelphia; Holy Cross Cemetery, Yeadon (Delaware County); Holy Sepulchre Cemetery, Cheltenham (Montgomery County); Immaculate Heart of Mary Cemetery, Linwood (Delaware County); Resurrection Cemetery, Bensalem (Bucks County); Saint John Neumann Cemetery, Chalfont (Bucks County); Saint Michael Cemetery, Chester (Delaware County); Saints Peter and Paul Cemetery, Springfield (Delaware County); All Saints Cemetery, Newtown (Bucks County); and Holy Savior Cemetery, Penn Township (Chester County).
Impact on Current Employees and Stakeholders of Catholic Cemeteries
All current full-time, year-round Catholic Cemeteries staff members will be offered employment with StoneMor and become employees of StoneMor effective with the closing date. As part of the arrangement, those employees have meaningful protections for a period of two years at their current base pay. They will also receive health benefits under StoneMor's healthcare plans. Additionally, years of service will be taken into account when determining the accrual of vacation time. "Our intent is to keep these employees whole, and we have a very strong track record of doing so in integrations like this," said Miller.
The Archdiocese is committed to working closely with StoneMor to ensure that all who are connected with Catholic Cemeteries experience a smooth transition. All priests of the Archdiocese as well as funeral directors and monument dealers with whom the Catholic cemeteries work are also being informed. "We look forward to working collaboratively with all who have served the families of the Archdiocese," Miller added.
Editor's Note:
About Catholic Cemeteries in the Archdiocese of Philadelphia
Founded in 1849, the Catholic Cemeteries Office of the Archdiocese of Philadelphia operates 13 cemeteries located in Chester, Delaware, Bucks, Montgomery and Philadelphia counties. Last year it conducted nearly 7,000 burials. It is staffed by approximately 160 full-time, year-round and approximately 30 seasonal employees in its central office at the Archdiocesan Pastoral Center and at individual cemeteries.
For additional information about the Catholic Cemeteries of the Archdiocese of Philadelphia, please visit http://www.archphila-cemeteries.org/ .
About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Levittown (Bucks County), is an owner and operator of cemeteries and funeral homes in the United States, with 277 cemeteries and 92 funeral homes in 27 states and Puerto Rico. StoneMor is a publicly traded company. StoneMor's cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services that provide for the installation of this merchandise.
For additional information about StoneMor Partners L.P., please visit StoneMor's website, and the Investor Relations section, at www.stonemor.com .
Forward-Looking Statements
Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of StoneMor's operating activities, the plans and objectives of its management, assumptions regarding its future performance and plans, and any financial guidance provided, as well as certain information in other filings with the Securities and Exchange Commission and elsewhere, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "project," "expect," "predict," and similar expressions identify these forward-looking statements. These forward-looking statements are made subject to certain risks and uncertainties that could cause StoneMor's actual results of operations to differ materially from those expressed or implied by forward-looking statements, including, but not limited to, the following: uncertainties associated with future revenue and revenue growth; the effect of the current economic downturn; the impact of StoneMor's significant leverage on its operating plans; StoneMor's ability to service its debt and pay distributions; the decline in the fair value of certain equity and debt securities held in its trusts; StoneMor's ability to attract, train and retain an adequate number of sales people; uncertainties associated with the volume and timing of pre-need sales of cemetery services and products; increased use of cremation; changes in the death rate; changes in the political or regulatory environments, including potential changes in tax accounting and trusting policies; StoneMor's ability to successfully implement a strategic plan relating to achieving operating improvement, strong cash flows and further deleveraging; StoneMor's ability to successfully compete in the cemetery and funeral home industry; uncertainties associated with the integration or the anticipated benefits of StoneMor's recent acquisitions and any future acquisitions; StoneMor's ability to complete and fund this transaction or future acquisitions; litigation or legal proceedings that could expose StoneMor to significant liabilities and damage its reputation; StoneMor's ability to maintain effective disclosure controls and procedures and internal control over financial reporting; the effects of cyber security attacks due to StoneMor's significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund StoneMor's pre-need funeral contracts; and various other uncertainties associated with the death care industry and StoneMor's operations in particular.
When considering forward-looking statements, the reader should keep in mind the risk factors and other cautionary statements set forth in StoneMor's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. Except as required under applicable law, StoneMor assumes no obligation to update or revise any forward-looking statements made herein or any other forward-looking statements made by StoneMor, whether as a result of new information, future events, or otherwise.
Archdiocese Contact: Kenneth A. Gavin Director of Communications 215-587-3747 (office) 610-291-0830 (cell) StoneMor Contacts: Christine Reimert - Media 610-639-2136 (cell) John McNamara - Investors 215-826-2945
