North Texas Community Hospital in Bridgeport is on track to become part of the Wise Regional Health System by mid-March.
Keeping the doors open until then is going to require some money.
At Monday evening’s meeting of the Wise Regional Health System Board of Directors, Jimmy Horner, chairman of the NTCH board, asked Wise Regional to provide increased financial assistance to enable the facility to remain open until the acquisition is finalized.
Max Ludeke, CEO of the Bridgeport hospital, distributed a handout to the WRHS board during the “public comment” portion of the meeting. He and Horner told the Wise Regional directors that $1.5 million in cash is needed to meet the operating needs of the facility from now until the deal closes. The money would also help pay other obligations that have been incurred and not paid since the bankruptcy petition was filed Nov. 8, 2012.
“We want NTCH to stay open and to transfer as an open facility to Wise,” Ludeke said. “We have worked since May of last year toward this deal. Now we find that additional funds are needed to get the deal to closing.”
Ludeke said that should come as “no surprise” to WRHS.
In a hearing held Feb. 4 in U.S. Bankruptcy Court in Fort Worth, Judge Michael Lynn awarded the bid to Wise Regional. But Ludeke told the court at that time that the Bridgeport hospital had experienced a steep financial downturn since the bankruptcy filing, with net operating losses in November, December and January.
To date, Wise Regional has loaned a total of $1 million to NTCH under a “debtor-in-possession” agreement. Most of that has gone to pay legal expenses associated with the bankruptcy filing. But that $1 million was a “plugged number” Ludeke said, since the true cost to make it through the transition period could not have been known at the time the terms were agreed upon.
“These dollars are now needed to get us to close [the deal] and to pay required Chapter 11 expenses,” he said. “Without the additional funding, the NTCH board will have no alternative but to close NTCH.”
He said if the hospital had to close, even for a short time, the entire community would be “seriously and immeasurably harmed with significant collateral damage.”
Ludeke said there is a “small window” to secure an agreement from bondholders and restructure the agreement so that bondholders get less and the debtor-in-possession loan is increased.
“[He] has indicated that they are willing to accept a lesser amount for the bonds to get this sale to close,” Ludeke said. “With that, the price to Wise does not change, simply the cash and debt structure of the deal changes.”
Last week, Wise Regional’s board approved issuing $19 million in bonds to replace the original bonds used to build the Bridgeport hospital. CEO Steve Summers said it would be mid- to late March before the new bonds were funded and Wise Regional could take official ownership of the hospital, although staff training and coordination has already begun.
After Monday’s request from Ludeke and Horner, Summers set up a phone conference Tuesday afternoon with Ian Hammell, attorney for the bond trustee.
“We’ll be having a conversation with the bond counsel at around 3 today to see if there’s anything that might come into play that makes any sense,” Summers said.
Summers said the bondholders – the people who actually still own NTCH until the deal is done – are the ones who will have to put up the funds to keep the hospital operating.
“We would be looking for consideration on the purchase price on the amount of bonds we would issue,” he said. “We have no interest in increasing the price we’re paying, so if we’re going to put more money into it, there would have to be some consideration from the bondholders.”
The Wise Regional board will meet again this Friday, March 1, to consider financial alternatives which may be acceptable to both Wise Regional and the bondholders. Summers said he expected that any change which might come out of this discussion would likely require approval by the bankruptcy court.
The Bridgeport hospital, which opened in August of 2008, has been in default on its nearly $60 million in bonded debt since May 2009. As part of the Chapter 11 bankruptcy filing, Wise Regional submitted a bid of $20 million – $19 million to the bondholders and that $1 million debtor-in-possession loan – for the facility’s assets. Wise Regional was the lone bidder.