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WARREN -- Steward Health Care has secured $225 million in emergency long-term financing that allows the health care provider to keep its 31 hospitals, including two in Ohio and one in Pennsylvania, open while it works its way through Chapter 11 bankruptcy.
The company -- the largest for-profit health care system in the U.S. -- announced Tuesday the debtor-in-possession funding commitment from its secured FILO, or first-in, last-out, lenders.
Steward will seek bankruptcy court approval at a hearing Thursday in Houston.
The Dallas-based company operates Trumbull Regional Medical Center in downtown Warren, Hillside Rehabilitation Hospital in Howland and Sharon Regional Medical Center in downtown Sharon, Pa.
"Since entering the Chapter 11 process, everything we have done has been to ensure that our hospitals, medical centers and physician's offices stay open, we continue to serve our patients, and maintain our commitment to employees ... Securing this additional financing from a group of our secured lenders not only speaks to our asset value, but more importantly provides Steward with a long runway to continue to stabilize our operations to the benefit of all of our stakeholders, including our physicians, employees, patients and vendors," Ralph de la Torre, Steward CEO, said in a statement.
A previous filing in the bankruptcy case stated the company needed to secure the funding no later than Friday.
When Steward Health filed for bankruptcy protection May 6, its landlord, Medical Trust Properties, agreed to $75 million in debtor-in-possession financing to continue operations.
However, Medical Trust Properties had not committed to another $225 million, which was at the company's discretion to provide, according to a May 31 filing in the case from Tyler Cowan, global head of restructuring and liability management at Lazard Freres & Co., a financial firm hired by Steward Health.
Because Medical Trustees Properties had balked, Cowan in the filing asked for a "comprehensive funding solution," that would guarantee third-party lenders interested in providing a long-term loan would be reimbursed expenses and fees for their work to develop a package, as well as a commitment fee to the lender with the best financing to encourage a competitive financing market.
The court approved the sweetener on June 3, which "instantly paid dividends" for Steward Health's financing process and "created a competitive dynamic" the company "sorely needed," resulting in multiple financing proposals, according to a court document Cowan filed Tuesday.
Negotiations led to Steward, along with their advisors, determining the FILO debtor-in-possession financing was the best available, Cowan's latest filing states.
Tuesday's release also states the additional financing gives the company flexibility to extend the marketing process for its hospitals and physician group, Stewardship Health, "if it maximizes value and is in the best interests of its stakeholders."
Steward Health for its Mahoning Valley facilities and one in western Pennsylvania has a bankruptcy court-approved timetable that calls for a June 24 bid deadline, June 27 auction and July 11 sale deadline. The timetable also applies to facilities in Massachusetts, Arizona, Arkansas and Louisiana.
For Steward Health's facilities in Florida and Texas, there is a bid deadline of Aug. 12, auction scheduled for Aug. 14 and sale hearing set for Aug. 22.