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 11th 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.
CONTACT: 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
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