CHARLOTTE, N.C., July 2, 2012 /PRNewswire/ -- MedCath
Corporation (Nasdaq: MDTH) announced that it entered into a
definitive equity purchase agreement and completed the sale of its
53.31% equity interest in Bakersfield Heart Hospital ("BHH") and
its secured loans to BHH to Cardiovascular Care Group
("CCG"). The transaction was effective June 30, 2012. Navigant Capital Advisors
provided advisory services to MedCath related to the
transaction.
The purchase price for MedCath's equity interest and secured
loans is approximately $38.1 million
subject to post-closing working capital adjustments. MedCath
anticipates it will receive approximately $34.0 million in cash from the transaction after
payment of taxes and closing costs. By completing this
transaction, MedCath has realized the value of BHH reflected in its
March 31, 2012 Form 10- Q filed with
the United States Securities and Exchange Commission (the "SEC") on
May 10, 2012. The anticipated net
cash proceeds do not include an estimate of BHH's liability, if
any, retained by MedCath arising out of the Department of Justice's
("DOJ's") national investigation regarding implantable cardioverter
defibrillators (the "ICD Investigation") . The purchase agreement
obligates MedCath to indemnify CCG for 53.31% of BHH liabilities
arising out of the ICD Investigation for the period prior to
closing.
"We have now sold all 10 of our hospitals since announcing in
March 2010 that we had formed a
Strategic Options Committee to consider the sale either of the
entire company or our assets," said Art
Parker, MedCath's CEO. "We're proud of the focus we always
maintained during this process on high-quality patient care, and we
wish the new owners great success."
On August 17, 2011, MedCath filed
a proxy statement with the SEC (the "Proxy") seeking stockholder
approval of a plan of complete liquidation and dissolution of the
Company (the "Plan of Dissolution"). The stockholders of
MedCath approved the Plan of Dissolution on September 22, 2011.
MedCath's Board of Directors believes the conditions outlined in
the Proxy to file a certificate of dissolution in accordance with
Section 275 of the General Corporation Law of the State of Delaware ("DGCL") (the "Filing") by
September 22, 2012 have been
satisfied. As a result, the Company currently anticipates
making the Filing on or about September 22,
2012 and making a liquidating distribution to its
stockholders as part of the Plan of Dissolution prior to the Filing
(the "Pre-Filing Distribution") currently estimated to be in the
range of approximately $5.75 to $6.25
per share.
Based on prior history, the Company does expect that it will
incur contingencies during its wind-down period that it cannot
accurately estimate at this time. Therefore, the estimated
Pre-Filing Distribution was derived using the Company's current
estimate of a cash holdback of approximately $48.0 to $58.0 million (the "Holdback").
The Holdback will be used to satisfy all of the Company's estimated
contingent liabilities, including without limitation (a) any
liabilities arising out of the DOJ's ICD Investigation, the exact
amount of which is currently unknown, (b) other currently
unknown or unanticipated liabilities due to the government for
unknown reimbursement claims, such as recovery audits ("RAC"
audits), cost report settlements, and any other unknown contingent
liability that may arise during the normal course of operations
during the wind-down period, including legal claims and
governmental investigations, as previously disclosed, and
(c) a reserve of such additional amount as the Board of
Directors determines to be necessary or appropriate under the DGCL
with respect to additional liabilities that may arise or be
identified after the Filing.
The Pre-Filing Distribution and the Holdback do not take into
consideration any tax benefits that may be realized as part of the
wind-down process, including the payment of contingent liabilities
related to the Holdback. The Pre-Filing Distribution also
does not take into consideration other assets that are expected to
be converted into cash subsequent to the Filing.
MedCath's management and Board of Directors will continue to
evaluate the adequacy of the Holdback and may make adjustments as
necessary to the Holdback prior to the Pre-filing
Distribution. The final amount of the Pre-Filing Distribution
is subject to the approval by the Board of Directors and is subject
to numerous risk factors listed in the Proxy and the Company's Form
10-K filed with the SEC on December
14, 2011. Future additional distributions during the
three year wind-down period, if any, will be made after the Filing
in accordance with the DGCL once provision has been made for all
liabilities of the Company.
The Company will close its stock transfer books on the date on
which the Filing is made and on that date the Company's common
stock will cease to be quoted on a registered securities exchange
and will otherwise cease to be traded. The Company intends to
announce the date of the Filing on a Form 8-K filed with the
Securities Exchange Commission at least 20 days prior to the date
on which the Filing is made.
About MedCath
MedCath Corporation, headquartered in Charlotte, N.C. was a health care provider
focused on high acuity services with the diagnosis and treatment of
cardiovascular disease being a primary service offering. After the
sale of BHH, MedCath will no longer operate hospitals, but will
focus on fulfilling transition service obligations to the
purchasers of certain of its hospitals; realizing the value of its
remaining assets; making tax and regulatory filings; winding down
its remaining business activities; managing its known and unknown
contingencies; and making distributions to its stockholders as part
of its Plan of Dissolution.
About CCG
Cardiovascular Care Group (CCG) is a physician-driven company
that partners with cardiovascular physicians to address the
fundamental problems in the delivery of care for patients with
cardiovascular disease. CCG, through its affiliates, first began
partnering with cardiologists in the ownership of outpatient
cardiac catheterization labs in 2000 and owns and operates
Louisiana Heart Hospital in Lacombe,
Louisiana. CCG is headquartered in Nashville, TN.
Safe Harbor Statement
Parts of this news release contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Some or all of the forward-looking statements in this
press release, which include the anticipated net proceeds of the
sale and the estimated Pre-Filing Distribution may turn out to be
wrong. Forward-looking statements can be affected by inaccurate
assumptions MedCath might make or by known or unknown risks and
uncertainties, including, but not limited to, the inherent
uncertainty of the outcome of the ICD Investigation and other known
and unknown contingent liabilities. Additional information
concerning events and uncertainties that could cause the actual
amount of the Pre-Filing Distribution to differ materially from the
estimated range disclosed in this press release is contained in
MedCath's reports to the Securities and Exchange Commission,
including MedCath's reports on Form 10-K and 10-Q. However, MedCath
undertakes no obligation to publicly update forward-looking
statements, whether because of new information, future events or
otherwise. Please refer to our Annual Report on Form 10-K, as
amended, for the fiscal year ended September
30, 2011. Copies of our filings with the Securities
and Exchange Commission, including exhibits, are available at
http://www.sec.gov.
SOURCE MedCath Corporation