Steward Secures $225M in Financing to Keep Operating
YOUNGSTOWN, Ohio – Steward Health Care System LLC has secured $225 million in additional funding that will enable it to continue operating as its Chapter 11 case winds through U.S. Bankruptcy Court in Houston.
The debtor-in-possession (DIP) financing will be provided by the so-called FILO lenders who hold first liens. “It is the product of a highly competitive process” led by Steward’s investment banker, Lazard Freres, and its independent transformation committee, the company said in an emergency motion seeking court approval.
A hearing is scheduled to take place Thursday before U.S. Judge Christopher Lopez.
John R. Castellano, the company’s chief restructuring officer, said in a declaration to the court: “Without immediate access to additional financing, [Steward] will lose their ability to stabilize their operations, retain employees, and pay for critical supplies and services, creating a far-reaching and immediate adverse impact not only on the [Steward’s] businesses but also its patients and communities at large.”
Steward received $75 million in DIP financing May 7 from Medical Properties Trust, its landlord and investor. But MPT declined to advance additional funds.
That set off a scurry for financing and a hearing June 3 over whether Steward could bypass its existing lenders and give “priming” to a new lender. Despite the objection of FILO lenders, the judge ruled in Steward’s favor.
The company said it would run out of money by June 14, and without an additional $225 million it could not complete the sale of its 31 hospitals in eight states. Among them are Trumbull Regional Medical Center in Warren, Hillside Rehabilitation Hospital in Howland, and Sharon Regional Medical Center in Sharon, Pa. Bids for the local hospitals and a cluster in Massachusetts are due June 24.
Steward is also selling its managed-care business, a network of 4,000 physicians.
The company filed Chapter 11 on May 6, at the time declaring $900 million in debt and $600 million in revenue.
Copyright 2024 The Business Journal, Youngstown, Ohio.
