A new lender stepped in to provide temporary financing to the bankrupt Hawaii Medical Center just before it hit a deadline to find a buyer.
Prime Healthcare Services, a California firm that owns and operates 14 acute-care hospitals in Southern and Northern California, has agreed to provide funding for the hospitals as they seek out a buyer, according to two people familiar with the deal who asked not to be identified because the company hasn’t released the information yet.
The new lender might be a potential purchaser, the sources said.
MidCap Financial, which had been funding HMC’s operations since June, had given HMC a Thursday deadline to secure a letter of intent and $250,000 deposit from a buyer for HMC-East in Liliha and HMC-West in Ewa.
The new lender can set new deadlines for a purchase. That gives the hospitals some breathing room.
HMC said it will be negotiating with potential purchasers this weekend and hopes to identify a buyer by Monday, when HMC is scheduled to give a sales update in bankruptcy court.
There are at least a half-dozen prospective buyers seriously considering the assets, and at least one has put down the required $250,000 deposit, HMC CEO Maria Kostylo said earlier this week.
HMC asked lawmakers at an informational briefing Thursday to consider an emergency appropriation of between $200,000 to $800,000 a month of taxpayer money as a contingency to cover several months of estimated shortfall if funding were to dry up.
If HMC is forced to close, it would put 990 employees out of work.
MidCap most recently provided the hospitals roughly $4.1 million for payroll and operations for the week ending Nov. 5 and nearly $2.2 million this week, court documents show.
HMC repays the lender as accounts receivables are paid; the company’s outstanding debt to MidCap was estimated at about $1.9 million as of the end of this week.
St. Francis Healthcare System of Hawaii, the former owner of HMC, announced in late October it was pulling out of a bankruptcy reorganization plan that would have returned the facilities to the Roman Catholic religious order.
The Franciscan sisters sold the hospitals in January 2007 for $68 million to HMC LLC, then a for-profit joint venture between Hawaii Physician Group LLC, composed of 130 local doctors, and Kansas-based Cardiovascular Hospitals of America. St. Francis provided the bulk of the financing for the sale — $40.2 million — and is HMC’s main creditor.
HMC first filed for Chapter 11 bankruptcy protection in August 2008. It emerged in August 2010 and became a nonprofit organization governed by a nine-member board of directors before filing its second bankruptcy in June.
