Saint Vincent Catholic Medical Centers emerges from bankruptcy with $320 million exit financing

By Caroline Salls

Pittsburgh, Sept. 4 - Saint Vincent Catholic Medical Centers emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Aug. 30, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The plan was confirmed on July 27.

"This is a new day for Saint Vincent's and the final milestone in our reorganization process is now completed," board chairman Alfred E. Smith IV said in a company news release.

"We have emerged as a stronger healthcare system, with a revitalized balance sheet and well positioned for continued future growth. We look forward to continuing to meet the healthcare needs of the Metropolitan area with excellence and pride."

As previously reported, Saint Vincent obtained $320 million in exit financing from GE Healthcare Financial Services.

The original exit commitment was $300 million, but GE Healthcare agreed to increase it to $320 million in July.

The facility's maturity will be seven years from the closing date.

Interest on the term loan portion of the exit facility will be Libor plus 300 basis points, and interest on the revolving credit facility will be Libor plus 200 bps.

Proceeds will be used to meet plan obligations and provide for the working capital and general corporate purposes of the reorganized company, including the issuance of letters of credit.

"We are now focused on the future, with a financially viable healthcare organization, which is committed to building a new technologically advanced "green" hospital to serve the West Side and Downtown of Manhattan," president and chief executive officer Henry Amoroso said in the release.

Saint Vincent said planning has begun for the new hospital that will be located across the street from the current Greenwich Village hospital campus.

Pei Cobb Freed and Partners has been selected as the architectural design firm for the new hospital, and Saint Vincent said it has been working with elected officials, community organizations, block associations and various leaders to seek their planning input.

Creditor treatment

Treatment of creditors under the plan will include:

• Holders of administrative expense, priority non-tax and DIP claims will recover 100% in cash;

• Holders of priority tax claims will recover 100% in cash over a maximum of six years plus 7% interest;

• Holders of other secured claims will recover 100% in either cash or return of the collateral securing the claim at the company's option;

• Holders of the Aptium secured claim will recover 100% of the anticipated compromise amount from a separate agreement;

• Holders of the Commerce secured claim will recover 100% through reinstatement of their claim;

• Holders of the RCG and Sun Life secured claims will recover 100% through either reinstatement of their claim or in cash;

• Holders of general unsecured claims against Saint Vincent will recover 100% plus interest through a cash distribution, which will yield an 80% distribution; a share of the secured obligation, which will yield a cumulative 85% distribution plus interest up to the fifth anniversary date; a share of the unsecured obligation, which will yield a cumulative 93% distribution plus interest up to the seventh anniversary of the effective date; and a share of the GUC litigation trust interest;

• Holders of medical malpractice BQ, MW and SI claims will recover 100% in cash plus interest to the extent that there is distributable cash in a medical malpractice trust, plus payments each time there is a cash payment to the trust;

• Holders of intercompany claims will recover 100% in cash after all general unsecured, medical malpractice and Pension Benefit Guaranty Corp. claims have been paid in full;

• Holders of DASNY subordinated claims will recover 41% in their share of $2.87 million, and, after all general unsecured, medical malpractice and PBGC claims have been paid in full, DASNY subordinated claimants will receive their share of $3.9 million; and

• Holders of equity interests in the other debtors will receive the remaining assets of the applicable debtor.

The New York metropolitan area health care system filed for bankruptcy on July 5, 2005. Its Chapter 11 case number is 05-14945.

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