A scheduled noon Friday meeting of the Wise Regional Health System board was cancelled Friday morning because of a lack of information for directors to act on.
At issue is a request for $1.5 million in operating cash from North Texas Community Hospital in Bridgeport.
That hospital is currently in bankruptcy and is scheduled to be acquired by Wise Regional by around the middle of this month. The funding request came Monday evening when NTCH CEO Max Ludeke and board chairman Jimmy Horner spoke to the Wise Regional board and advised them of the situation.
The matter was not on the board’s agenda and therefore could not be acted upon, but directors said they would explore the idea of providing increased financial assistance to NTCH with the attorney for the bondholders.
Wise Regional has a contract in place to purchase the assets of NTCH out of bankruptcy for $20 million. Of that, $1 million has been provided as a debtor-in-possession loan, while $19 million in bonds are being issued to replace the nearly $60 million in original NTCH bonds which have been in default since 2009. The deal was approved in U.S. Bankruptcy Court in Fort Worth on Feb. 4.
Wise Regional proposed lowering the bond amount by $1.5 million and providing that $1.5 million in cash for operating funds to NTCH – keeping the overall purchase price the same. However, that would have to be approved by the bondholders and likely also by the court.
Wise Regional CEO Steve Summers said after a telephone conference Tuesday between Wise Regional’s attorney and the attorney for the bondholders, he expected a “meaningful response” by Thursday, “in consideration of the immediate and urgent needs of NTCH.”
“The sensitivity to have this discussion in a timely manner was expressed to and otherwise known by bondholder counsel,” Summers said in a news release issued Friday morning. “Counsel was additionally made aware that a public meeting of the board of directors of Wise Regional Health System would be scheduled and posted for Friday, March 1, to consider any reasonable financial alternatives available.
“However, bondholder counsel has not come forth within the necessary time frame to enable a potential decision by the Wise Regional Board today,” he continued. “Accordingly, it has been determined to cancel the meeting.
“At such time as there is a meaningful conversation between Wise Regional counsel and the bondholders counsel, a future Wise Regional Board meeting could then be rescheduled with the agenda posted as required by law.”
Summers said the Decatur-based hospital continues to make plans to provide services as quickly and as safely as possible following the acquisition of the Bridgeport facility.
Max Ludeke, CEO of North Texas Community Hospital, said Friday morning that the matter is out of his hands.
“Our attorney is in touch with bondholders’ counsel,” he said. “It’s all with the lawyers right now, and I really don’t have any insight into those discussions.”
He suggested that if Wise Regional can’t get bondholders’ to go along with the reduction, the additional funds could be paid after the sale closes.
“We average around $80 million a year in gross billings,” he said. “The additional funds we’re looking for could be paid out of that future income stream which Wise Regional is acquiring.”
Ludeke noted that NTCH is cutting expenses wherever possible and working hard to meet its obligations under the bankruptcy agreement.
“We’re required to pay all operating expenses under the Chapter 11 agreement, and right now expenses that are not being paid are growing faster than the cash is coming in,” he said. “We’re looking for ways to keep in compliance.
“Our real concern is to keep the asset intact for the community and to preserve as many jobs as possible,” he said.