CHARLOTTE, N.C., May 9, 2011 /PRNewswire/ -- MedCath Corporation
(Nasdaq: MDTH), a healthcare provider focused on high acuity
healthcare services, today announced that it has entered into
definitive agreements relating to the sale of Arkansas Heart
Hospital and Heart Hospital of New
Mexico.
Arkansas Heart Hospital
MedCath Corporation announced today it has entered into a
definitive agreement to sell its 70.3% ownership interest and
management rights in Arkansas Heart Hospital to AR-MED, LLC
pursuant to the terms of an Equity Purchase Agreement dated
May 6, 2011 (the "Equity Purchase
Agreement"). AR-MED, LLC is majority owned by Dr.
Bruce Murphy, a physician affiliated
with Little Rock Cardiology Clinic, P.A. and a current investor in
the Arkansas Heart Hospital. The transaction is subject to
MedCath stockholder approval and other customary closing conditions
listed in the Equity Purchase Agreement.
Purchase terms are based on the hospital's valuation of
$73.0 million plus a percentage of
the hospital's available cash, which is anticipated to net
approximately $60.0 million to
MedCath after closing costs and taxes. The net amount anticipated
to be received by MedCath includes repayment of inter-company debt
owed by Arkansas Heart Hospital to MedCath.
"We are proud of the accomplishments achieved by working closely
with Arkansas Heart Hospital's physician leadership over the past
14 years, and are glad to see that legacy continue with the
acquisition of MedCath's ownership," said O. Edwin French, MedCath's president and
CEO.
Heart Hospital of New
Mexico
MedCath also announced today that its Heart Hospital of
New Mexico has entered into a
definitive agreement to sell substantially all of its assets to
Lovelace Health System, Inc. pursuant to the terms of an Asset
Purchase Agreement dated May 6, 2011
(the "Asset Purchase Agreement"). The transaction is subject to
MedCath stockholder approval, regulatory approval and other
customary closing conditions listed in the Asset Purchase
Agreement. Lovelace Health System, Inc. is an Albuquerque, New Mexico, health system which
is part of Ardent Health Services, based in Nashville, Tennessee.
The transaction values the Heart Hospital of New Mexico's assets at $119.0 million. The limited liability company
that currently owns Heart Hospital of New
Mexico, of which 74.8% is owned by MedCath, will retain its
net working capital. MedCath anticipates receiving approximately
$62.0 million in net proceeds from
the transaction, after collection of all accounts receivable,
payment of all known liabilities, including taxes, and repayment of
inter-company debt owed by Heart Hospital of New Mexico to MedCath, pro-rata minority
interest payments and an allocation of additional funds to the
hospital's minority partners by MedCath in consideration for the
partners' consent to the transaction that was required under the
limited liability company's Operating Agreement as a condition to
entering into this transaction.
"The Heart Hospital of New
Mexico has demonstrated its effectiveness in delivering
quality care since its opening in 1999, attending to the needs of
patients suffering from cardiovascular disease throughout
New Mexico, " said O. Edwin French, MedCath's president and CEO.
"We're very proud of our role in working with our physician
partners to help meet this need."
Navigant Capital Advisors, LLC acted as financial advisor to
MedCath Corporation in connection with the sale of Arkansas Heart
Hospital and the Heart Hospital of New
Mexico.
Proxy Filing
MedCath will file a proxy statement with the Securities and
Exchange Commission to request stockholder approval of the Arkansas
Heart Hospital and Heart Hospital of New
Mexico transactions. In addition to requesting stockholder
approval of the Arkansas Heart Hospital and Heart Hospital of
New Mexico transactions, MedCath
anticipates that the proxy filing will also request stockholder
approval to authorize the MedCath Board of Directors to dissolve
MedCath, sell MedCath's remaining assets without further
stockholder approval, and distribute available net proceeds to
stockholders. As a result of undertaking the dissolution process
and continuing the strategic options process, MedCath will incur
wind-down expenses and will continue to incur expenses directly
related to the strategic options process, the amount of which will
be material. In addition, the wind-down process will require the
reserving of funds for known and unknown contingent liabilities and
the reserving of funds for future operating costs for any unsold
assets, the amount of which may be material. MedCath currently
anticipates filing the proxy statement with the Securities and
Exchange Commission during its fiscal third quarter ending
June 30, 2011.
MedCath Corporation, headquartered in Charlotte, N.C., is a healthcare provider
focused on high acuity services with the diagnosis and treatment of
cardiovascular disease being a primary service offering.
MedCath owns an interest in and operates six hospitals with a
total of 533 licensed beds, located in Arizona, Arkansas, California, Louisiana, New
Mexico, and Texas.
Parts of this announcement contain forward-looking statements
that involve risks and uncertainties including but not limited to
those relating to the consummation of the sales of our interests in
Arkansas Heart Hospital and the assets of Heart Hospital of
New Mexico , the amount of
proceeds MedCath may receive as a result of these transactions, the
filing of the proxy statement, including the timing and proposals
to be contained therein, expenses to be incurred by MedCath, and
distributions to be made to MedCath stockholders in connection with
the dissolution of the Company. Although management believes that
these forward-looking statements are based on reasonable
assumptions, these assumptions are inherently subject to
significant economic, regulatory and competitive uncertainties and
contingencies that are difficult or impossible to predict
accurately and are beyond our control including, but not limited
to, our ability to consummate the transactions described
herein, the implementation of healthcare reform legislation
and future enactment of changes in federal
law that would further limit physician hospital
ownership and other factors. Actual results could differ
materially from those projected in these forward-looking
statements. We do not assume any obligation to update these
statements in a news release or otherwise should material facts or
circumstances change in ways that would affect their accuracy. The
preparation of MedCath's second quarter of fiscal 2011 operating
results required management to make estimates and assumptions that
affect reported amounts of revenues and expenses. There is a
reasonable possibility that actual results may vary significantly
from those estimates.
These various risks and uncertainties are described in detail in
"Risk Factors" in MedCath's Annual Report or Form 10-K for the year
ended September 30, 2010 filed with
the Securities and Exchange Commission on December 14, 2010. Copies of our filings
with the Securities and Exchange Commission, including exhibits,
are available at http://www.sec.gov.
SOURCE MedCath Corporation