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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
South Dakota and
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.
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
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.