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MedCath Announces Sale Of Ownership Interest In Harlingen Medical Center And HMC Realty, LLC









CHARLOTTE, N.C., Dec. 1, 2011 /PRNewswire/ -- MedCath Corporation (Nasdaq: MDTH) announced today it sold its ownership interest in Harlingen Medical Center and HMC Realty, LLC to Prime Healthcare Services ("Prime"). The execution of the purchase agreement and closing occurred simultaneously, effective November 30, 2011. Navigant Capital Advisors provided advisory services to MedCath on the transaction.

Prime acquired MedCath's 34.83% ownership in Harlingen Medical Center and its 36.06% ownership in HMC Realty. Harlingen Medical Center operates a 112 licensed bed general acute care hospital located in Harlingen, Texas. HMC Realty, LLC, a single-purpose entity, owns the real estate and building in which Harlingen Medical Center is located and leases the property and improvements to Harlingen Medical Center. The transaction valued MedCath's combined ownership interest in Harlingen Medical Center and HMC Realty, LLC at $9.0 million.

MedCath estimates that the proceeds from the sale, along with the recapture of prior losses attributable to the operation of Harlingen Medical Center, will result in a tax gain on the transaction of approximately $20.4 million. As a result of the tax gain, MedCath anticipates that net after tax proceeds from the transaction will equal approximately $0.3 million, which is consistent with the estimates with respect to such transactions included in both the low end and the high end of the estimated liquidating distributions to stockholders range set forth in the Proxy Statement filed by MedCath with the Securities and Exchange Commission on August 17, 2011. The Proxy Statement contains a schedule referred to as the Estimated Liquidating Distributions to Stockholders (the "Schedule"). The gross proceeds from the transaction announced today, less transaction expense, is included in the Schedule in the line item "Proceeds from remaining sale of assets", while the tax impact from the transaction is included in the Schedule in the line item "Corporate income tax refunds, net".   Neither Harlingen Medical Center nor HMC Realty were a party to long-term intercompany debt arrangements with MedCath.

This is MedCath's 12th 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 (2 hospitals), Arkansas, Louisiana, New Mexico, South Dakota and Texas (3 hospitals). 



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