Tri-Lakes Hospital

Published 12:00 am Friday, January 9, 2009

Tri-Lakes hospital edges closer to new owner, post-bankruptcy

By John Howell Sr.

The Tri-Lakes Medical Center will probably be purchased by a for-profit entity in coming weeks, Chief Restructuring Officer Mike Morgan said Tuesday.

The sale would end the chapter 11 bankruptcy that the facility filed in August, 2007, to allow reorganization under court supervision. At least four groups are conducting due diligence on the hospital with a view to submitting purchase proposals in a Section 363 sale, Morgan said.

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“One is looking at having a physicians’ syndicate as part of the deal; others may look at a physicians’ syndicate after the sale,” Morgan said.

An initial Jan. 6 deadline for prospective buyers to complete due diligence was extended until Jan. 12, Derek Pierce said. Pierce and Morgan are managing directors of Healthcare Management Partners (HMP). HMP was selected by the bankruptcy court and by Tri-Lakes trustees in December, 2007 to administer the hospital for the court.

“The lenders are on the same page,” as the prospective buyers, Morgan continued, “as long as the sale is going to cover their debt or at least the portion of their debt they figure they need to get collected.”

“Getting in new working capital is a very major portion of a new sale,” the CRO said. “Anybody that’s going in is going to have to bring enough …; any bids would include an amount that would be new working capital.”

GECC has provided working capital under court supervision during the bankruptcy. The court approved a 90-day extension of the post-petition financing on Dec. 30.

“That’s a very good that they’re willing to extend DIP (debtor in possession) financing; that’s good that they extended 90 days instead of 30 days at a time,” Morgan continued. He described the hospital’s financial situation as “stabilized.”

“We’re moving forward; we’re not dealing with the rumors every two weeks” about the hospital shutting down or not making payroll, Morgan added.

The Tri-Lakes Medical Center was purchased from the City of Batesville and Panola County by the non-profit Physicians and Surgeons Hospital Group in November, 2005. In August, 2007, citing a drastic cut in reimbursement from Medicaid and other factors, the facility declared bankruptcy.