CHARLOTTE, N.C., Oct. 3, 2011 /PRNewswire/ -- MedCath Corporation (Nasdaq: MDTH) announced that it has sold its interest in Louisiana Medical Center & Heart Hospital to Cardiovascular Care Group (CCG). The purchase agreement and the transaction were simultaneously signed and closed, effective Sept. 30, 2011.
MedCath also announced it has completed the sale of substantially all the assets of Hualapai Mountain Medical Center in Kingman, Ariz., to Kingman Regional Medical Center (KRMC), also effective Sept. 30, 2011. The transaction was announced in August and was subject to MedCath stockholder approval, which occurred during a Special Meeting of Stockholders on Sept. 22, 2011, as well as 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 was completed in accordance with the terms outlined in MedCath's press release issued August 26, 2011 and Form 8-K filed by MedCath with the Securities and Exchange Commission (the "Commission") on September 1, 2011 together with the additional information provided in the Supplement to Proxy Statement filed with the Commission on September 2, 2011.
MedCath has now completed 11 transactions since announcing in March 2010 it had formed a Strategic Options Committee to consider the sale either of the entire company or its assets. Earlier this month, MedCath's stockholders approved the proposals contained in a proxy statement filed with the Securities and Exchange Commission on Aug. 17, 2011, authorizing the sale of substantially all the remaining assets of MedCath and the dissolution of the company.
The transaction involving Louisiana Medical Center & Heart Hospital potentially allows the hospital to continue providing high-quality services to St. Tammany Parish and the surrounding areas. It also means local physicians will continue to play a significant role in running the hospital's operations and charting its future direction.
"We're very proud of how Louisiana Medical Center & Heart Hospital has distinguished itself with the quality care it provides," said Art Parker, MedCath's CEO. "It's been named one of the nation's 100 Top Hospitals® for cardiovascular care by Thomson Reuters, it has a patient satisfaction rate of more than 99 percent and it has the best cardiac outcomes of any North Shore hospital. This transaction enables that legacy to continue."
The transaction was structured such that MedCath and CCG simultaneously signed the purchase agreement and closed the transaction. Immediately prior to closing, MedCath converted part of its intercompany loans to the hospital to additional equity in the hospital, increasing MedCath's ownership to 95.4 percent, from 89.2 percent. MedCath then sold its equity and its remaining intercompany loans to CCG for approximately $23.0 million subject to certain working capital adjustments. MedCath financed CCG's purchase with a seller note that matures 60 days after closing, subject to extension of up to 60 additional days. That 60-day window provides CCG an opportunity to obtain permanent financing of its purchase. The promissory note is secured by the equity in the hospital and the intercompany loans that were sold to CCG, but is otherwise non-recourse to CCG and its affiliates. Upon payment of the promissory note by CCG, MedCath anticipates receiving approximately $33.0 million from the transaction after closing costs, including tax benefits related to the sale. Navigant Capital Advisors provided advisory services to MedCath related to the transaction.
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 two hospitals with a total of 159 licensed beds, located in California and Texas.
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. CCG is headquartered in Nashville, TN.
SOURCE MedCath Corporation