UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 1820, 2010

SHG SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware	333-167041	13-4230695
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
18831 Von Karman, Suite 400 Irvine, CA		92612
(Address of principal executive offices)		(Zip Code)

18831 Von Karman, Suite 400

Irvine, CA

92612

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number including area code: (949) 255-7100

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 13.0103 ~~Entry~~Material ~~into~~Modifications ato ~~Material~~Rights ~~Definitive~~of ~~Agreement~~Security Holders.

~~Credit~~The ~~Facility~~information ~~Overview~~included in Item 5.03 is incorporated herein by reference.

OnItem ~~October 18, 2010, Sun Healthcare Group, Inc~~5. ~~(“Sun”)~~03 ~~and~~Amendments ~~SHG~~to ~~Services,~~Articles ~~Inc., a wholly owned subsidiary~~ of ~~Sun~~Incorporation ~~(“New~~or ~~Sun”),~~Bylaws; ~~entered~~Change ~~into~~in aFiscal ~~Credit Agreement (the “New Sun Credit Agreement”) with Credit Suisse AG, as administrative and collateral agent, Credit Suisse Securities (USA) LLC, J~~Year.P. Morgan Securities LLC, and RBC Capital Markets, as joint bookrunners and joint lead arrangers, JPMorgan Chase Bank, N.A., as syndication agent, RBC Capital Markets, as documentation agent, and the lenders party thereto. As previously announced, as result of Sun’s restructuring plans to separate its operating and real property assets, New Sun will own Sun’s operating assets.

~~The~~Effective ~~New~~October 21, ~~Sun~~2010, ~~Credit~~SHG ~~Agreement~~Services, ~~provides for $150~~Inc.0 ~~million~~(“New inSun”) ~~term~~amended ~~loans,~~and arestated ~~$60.0~~its ~~million~~Certificate ~~revolving~~of ~~credit~~Incorporation ~~facility~~by ~~($30.0~~filing ~~million~~an ofAmended ~~which~~and ~~may~~Restated beCertificate ~~utilized for letters~~ of ~~credit)~~Incorporation ~~and~~with athe Secretary ~~$75.0~~of ~~million~~State ~~letter~~ of ~~credit~~the ~~facility~~State ~~funded~~of byDelaware ~~proceeds~~(as ofamended, ~~additional~~the ~~term~~“Amended ~~loans.~~and ~~Availability~~Restated Certificate of ~~amounts~~Incorporation”). ~~under~~The ~~the~~Board ~~revolving~~of ~~credit~~Directors ~~facility~~of isNew ~~subject~~Sun tohas ~~compliance~~also ~~with~~adopted ~~financial~~and ~~covenants,~~approved ~~including~~ an ~~interest~~amendment ~~coverage test~~ and arestatement ~~total~~of ~~leverage~~the ~~covenant.~~By-laws ~~The revolving~~of ~~credit~~New ~~facility~~Sun ~~was~~(as amended, ~~undrawn~~the on“Amended ~~October 18,~~and ~~2010~~Restated By-laws”).

InThe ~~addition~~material toterms ~~funding the letter~~ of ~~credit facility,~~ the ~~proceeds~~Amended ofand ~~the term~~Restated ~~loans~~Certificate ~~were used to repay outstanding term loans under Sun’s existing credit agreement, dated as~~ of ~~April 19,~~Incorporation ~~2007,~~and ~~among Sun,~~ the Amended ~~lenders named therein~~ and ~~Credit~~Restated ~~Suisse~~By-laws asare ~~administrative~~described ~~agent~~in ~~and~~the ~~collateral~~section ~~agent~~titled ~~for~~“Description ~~the~~of ~~lenders (the~~New ~~“Old~~ Sun ~~Credit~~Capital ~~Agreement~~Stock”), toincluded ~~pay~~in ~~related~~Amendment ~~fees~~No. 4 ~~and expenses and~~ to ~~provide funds for general corporate purposes. The letter of credit facility replaced~~ the ~~letter~~Registration ofStatement ~~credit~~on ~~facility~~Form ~~under~~S-1 ~~the~~filed ~~Old~~by New Sun ~~Credit~~with ~~Agreement. The final maturity date of~~ the ~~term~~Securities ~~loans~~ and ~~the~~Exchange ~~letter of credit facility is October 18, 2016 and the revolving credit facility terminates~~ Commission on ~~October~~September 1828, ~~2015.~~2010 ~~However,~~(File ~~if Sun’s 9~~No.~~125% senior subordinated notes due 2015 are outstanding on January~~ 13333-167041), ~~2015,~~which ~~the~~section ~~term~~is ~~loans~~incorporated ~~will~~herein ~~mature,~~by ~~and~~reference. ~~the~~A ~~letter~~copy of ~~credit~~this ~~facility~~description ~~and~~is ~~revolving~~attached ~~credit~~as ~~facility~~Exhibit ~~will~~99.1 ~~terminate,~~to this Current Report on ~~January 13,~~Form ~~2015~~8-K.

~~Interest~~The ~~Rate~~Amended and ~~Fees~~Restated Certificate of Incorporation and the Amended and Restated By-laws are filed as Exhibit 3.1 and Exhibit 3.2, respectively, to this Current Report on Form 8-K.

~~Borrowings~~Item ~~under~~5.07 ~~the~~Submission ~~New~~of ~~Sun~~Matters ~~Credit Agreement bear interest on the outstanding unpaid principal amount at a rate equal~~ to ~~an applicable percentage plus, at New Sun’s option, either (~~a~~) the~~ ~~greater~~Vote of ~~1.75%~~Security or London Interbank Offered Rate (“LIBOR”), adjusted for statutory reserves, or (b) an alternative base rate determined by reference to the highest of (i) the prime rate announced by Credit Suisse, (ii) the federal funds rate plus one-half of 1Holders.0%, and (iii) the greater of 1.75% or one-month LIBOR adjusted for statutory reserves plus 1%. The applicable percentage for term loans and revolving loans is 4.75% for alternative base rate loans and 5.75% for LIBOR loans.

InOn ~~addition~~October 20, to2010, ~~paying~~Sun ~~interest~~Healthcare onGroup, ~~outstanding~~Inc., ~~principal~~as ~~under~~ the ~~New~~sole ~~Sun~~stockholder ~~Credit~~of ~~Agreement,~~ New Sun, isexecuted ~~required to pay~~ a ~~facility~~Written ~~fee~~Consent of ~~0.50% per annum to~~ the ~~lenders~~Sole ~~under~~Stockholder ~~the~~of ~~revolving~~New ~~credit facility~~Sun inadopting ~~respect~~and ofapproving the ~~unused~~Amended ~~revolving~~and ~~commitments~~Restated Certificate ~~thereunder~~of Incorporation.

Amortization

Amounts borrowed under the term loan facility are due in quarterly installments of $2.5 million, with the remaining principal amount due on the maturity date of the term loans. Accrued interest is payable at the end of an interest period, but no less frequently than every three months. Each year, commencing in 2012, within 90 days of the prior fiscal year end, New Sun is required to prepay a portion of the term loans in an amount based on the prior year’s excess cash flows, if any, as defined in the New Sun Credit Agreement.

Certain Covenants and Events of Default

The New Sun Credit Agreement contains customary covenants restricting certain actions, including incurrence of indebtedness, liens, payment of dividends, repurchase of stock, acquisitions and dispositions, mergers and investments. The New Sun Credit Agreement also contains customary events of default, such as a failure by New Sun to make payment of amounts due, defaults under other agreements evidencing indebtedness, certain bankruptcy events and a change of control (as defined in the New Sun Credit Agreement). Upon the occurrence of an event of default under the New Sun Credit Agreement, the lenders may cease making revolving loans, terminate the New Sun Credit Agreement and declare all amounts outstanding to be immediately due and payable.

Collateral and Guarantees

Prior to the declaration of the distribution by Sun to its stockholders on a pro rata basis of all of the outstanding shares of New Sun common stock (the “Separation”), the obligations of New Sun under the New Sun Credit Agreement will be guaranteed by Sun and most of Sun’s subsidiaries and will be collateralized by the assets of Sun and most of Sun’s subsidiaries, excluding the real property assets that will be owned by Sabra Health Care REIT, Inc. (“Sabra”) and its subsidiaries following the Separation. On the declaration date for the Separation, the guarantee by Sun and by those subsidiaries of Sun that will become subsidiaries of Sabra following the Separation will terminate. However, the obligations of New Sun under the New Sun Credit Agreement will continue to be guaranteed by most of New Sun’s subsidiaries and will continue to be collateralized by the assets of New Sun and most of New Sun’s subsidiaries.

Certain Relationships

The agents and arrangers (and their respective subsidiaries or affiliates) under the New Sun Credit Agreement have in the past provided, and may in the future provide, investment banking, underwriting, lending, commercial banking, hedging, leasing, trust and advisory services to Sun, its subsidiaries or affiliates. These parties have received, and may in the future receive, customary compensation from Sun or its subsidiaries or affiliates for such services.

The New Sun Credit Agreement is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by this reference. This description of the material terms of the New Sun Credit Agreement is qualified in its entirety by reference to such exhibit.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Please see the disclosure set forth under “Item 1.01 Entry into a Material Definitive Agreement,” which is incorporated by reference into this Item 2.03.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits 10.1 Credit Agreement, dated October 18, 2010, among Sun Healthcare Group, Inc. and SHG Services, Inc., lenders party thereto, Credit Suisse AG, as administrative and collateral agent, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, and RBC Capital Markets, as joint bookrunners and joint lead arrangers, JPMorgan Chase Bank, N.A., as syndication agent, RBC Capital Markets, as documentation agent


3.1		Amended and Restated Certificate of Incorporation of SHG Services, Inc., dated October 20, 2010, filed with the Secretary of State of the State of Delaware on October 21, 2010.

3.2		Amended and Restated By-laws of SHG Services, Inc.

99.1		The section titled “Description of New Sun Capital Stock” appearing on pages 237 to 240 of Amendment No. 4 to the Registration Statement on Form S-1 filed by New Sun with the Securities and Exchange Commission on September 28, 2010 (File No. 333-167041) is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SHG SERVICES, INC. /sS/ ~~Mike~~MIKE ~~Berg~~BERG Name: Mike Berg Title: Secretary

Dated: October 21 26, 2010

EXHIBIT INDEX

Exhibit Number		Description
ExhibitNumber		Description
10.1		Credit Agreement, dated October 18, 2010, among Sun Healthcare Group, Inc. and SHG Services, Inc., lenders party thereto, Credit Suisse AG, as administrative and collateral agent, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, and RBC Capital Markets, as joint bookrunners and joint lead arrangers, JPMorgan Chase Bank, N.A., as syndication agent, RBC Capital Markets, as documentation agent
3.1		Amended and Restated Certificate of Incorporation of SHG Services, Inc., dated October 20, 2010, filed with the Secretary of State of the State of Delaware on October 21, 2010.
3.2		Amended and Restated By-laws of SHG Services, Inc.
99.1		The section titled “Description of New Sun Capital Stock” appearing on pages 237 to 240 of Amendment No. 4 to the Registration Statement on Form S-1 filed by New Sun with the Securities and Exchange Commission on September 28, 2010 (File No. 333-167041) is incorporated herein by reference.

Filing Compare · SHG Services, Inc.