US-based integrated value-based healthcare system Steward Health Care has obtained $225m in additional financing commitments to sustain hospital operations following its recent bankruptcy filing.
Steward Health Care is now planning to seek court approval for this financial support later in the week at the US Bankruptcy Court for the Southern District of Texas.
The latest financing, which has been provided by a consortium of Steward’s secured First-in, Last-out (FILO) lenders, is critical for the company’s continuity.
It will enable Steward Health Care to manage its strategic marketing process flexibly, aiming to maximise value for all stakeholders, including vendors and creditors, during the bidding for the sale of Stewardship Health, which is subject to regulatory approval.
The debtor-in-possession (DIP) financing facility offers Steward Health Care the necessary flexibility to extend the marketing process if it benefits the company's stakeholders.
This includes the potential reorganisation around certain assets to ensure the selection of the most advantageous bidder and to maximise creditor value.
Legal counsel for the company is provided by Weil, Gotshal & Manges, while AlixPartners offers financial advisory services, with John Castellano of AlixPartners acting as the chief restructuring officer.
Investment banking services are being rendered by Lazard Frères & Co., Leerink Partners, and Cain Brothers, a division of KeyBanc Capital Markets.
Bloomberg reported that the cash injection was necessary as Medical Properties Trust, the hospital landlord, rejected to provide an advance of more than an initial $75m Chapter 11 loan.
Steward Health CEO Dr Ralph de la Torre said: “Securing this additional financing from a group of our secured lenders not only speaks to our asset value but more importantly provides Steward with a long runway to continue to stabilise our operations to the benefit of all of our stakeholders, including our physicians, employees, patients and vendors.”
Steward Health Care filed for bankruptcy protection on 6 May after which it announced decision to sell all 31 of its hospitals in the US to manage its $9bn in total liabilities.
