CHARLOTTE, N.C., Aug. 26, 2011 /PRNewswire/ -- MedCath Corporation
(Nasdaq: MDTH) announced today it has entered into a definitive
agreement to sell substantially all the assets of Hualapai Mountain
Medical Center in Kingman, Ariz.,
to Kingman Regional Medical Center (KRMC).
MedCath also announced today that on or before Sept. 30, 2011, it will close the 70-bed Hualapai
Mountain Medical Center, subject to regulatory requirements.
MedCath is notifying all employees at Hualapai Mountain Medical
Center of the decision and providing the staff with advance
termination notice. MedCath will offer severance to staff at the
facility who are eligible under MedCath policy if they are not
hired by KRMC. MedCath is also providing notice to the applicable
regulatory authorities of its plans to close the facility, as well
as physicians practicing at the hospital. Following required
regulatory notifications, an appropriate plan for the wind down of
patient care operations will be implemented.
KRMC has indicated that it will reopen the facility in
a limited capacity, reflecting the current demand locally
for hospital services, and expects to offer employment to a
number of the terminated HMMC employees based on that estimated
demand. Going forward, KRMC had indicated that it will
continue to assess the best ways to utilize the facility in a
manner that will best serve the community and maintain viability in
the current challenging healthcare economy.
MedCath will conduct a Special Meeting of Stockholders on
September 22, 2011, to consider
proposals contained in a proxy statement filed with the Securities
and Exchange Commission on August 17,
2011. The sale of Hualapai Mountain Medical Center is
subject to MedCath stockholder approval of the proposals contained
in the proxy statement and to other customary closing conditions
contained in the Asset Purchase Agreement entered into between the
limited liability company that owns Hualapai Mountain Medical
Center and KRMC. The transaction is expected to be completed by the
end of September, and at that time, KRMC will take possession of
the facility as part of the asset transfer. Navigant Capital
Advisors provided advisory services to MedCath related to the
transaction.
This will be MedCath's 10th transaction since announcing in
March 2010 it had formed a Strategic
Options Committee to consider the sale either of the entire company
or its assets. This includes sales, among others, of hospitals in
Arizona, Arkansas, New
Mexico, South Dakota and
Texas.
The transaction valued the assets of Hualapai Mountain Medical
Center, along with 18.6 acres of adjacent undeveloped land, at
$31.0 million plus retention of
working capital. Anticipated net proceeds to MedCath, including
benefits from the liquidation of retained accounts receivable and
realization of tax losses on the sale, and after closing costs,
payment of known liabilities and the currently anticipated
acquisition of the partnership's minority investors' ownership in
accordance with the terms of an agreement entered into by MedCath
and the minority partners of the hospital, is anticipated to total
approximately $42.0 million. This
amount is consistent with the range of distributable proceeds
MedCath disclosed in its recent proxy statement. The
anticipated net proceeds do not include any reserves for unknown or
contingent liabilities retained by the limited liability company
that owns Hualapai Mountain Medical Center. The limited
liability company that owns Hualapai Mountain Medical Center is
retaining liabilities arising from the ownership and operation of
the hospital prior to the closing of the sale.
About MedCath
MedCath Corporation, headquartered in Charlotte, N.C., is a health care 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 four hospitals with a total of 366
licensed beds, located in Arizona,
California, Louisiana and Texas.
Parts of this announcement contain forward-looking statements
that involve risks and uncertainties, including those relating to
the sale of substantially all of the assets of Hualapai Mountain
Medical Center. Although MedCath's management believes that these
forward-looking statements are based on reasonable assumptions,
these assumptions are inherently subject to various risks,
including obtaining required regulatory approvals and satisfaction
of other closing conditions, that are difficult or impossible to
predict accurately and, in some cases, are beyond MedCath's
control. Actual results could differ materially from those
projected in these forward-looking statements. MedCath assumes no
obligation to update these statements in a news release or
otherwise should material facts or circumstances change in ways
that would affect their accuracy.
SOURCE MedCath Corporation