Jackson Hospital engaged Allen Wilen, partner at Eisner Advisory Group, because the chief restructuring officer in early September.
The defaulted issuer Jackson Hospital & Clinic of Birmingham, Alabama, is ready to receive bridge loans from among the holders of its bonds.
Investors participating in talks with the hospital have agreed to loan as much as $22 million of bridge notes to the hospital, in line with a posting to the Municipal Securities Rulemaking Board’s EMMA website.
The bridge loans will are available in the shape of senior notes to be issued as Tranches 1A for $5 million, 1B for $10 million, and a pair of for $7 million and bear a 13% rate of interest.
Moreover, purchasers of the notes will get 3% more in principal than they’re investing.
Along with the notes, the hospital has arranged a $3.5 million loan from ServisFirst Bank of Alabama.
Agreements between the participating bondholders and the hospital set out conditions for the sequential release of the note money to the hospital.
The hospital defaulted on $60 million of Medical Clinic Board of the City of Montgomery, Alabama, healthcare facility revenue bonds this summer.
For the reason that default, holders of a majority in principle of the bonds and the hospital have held ongoing talks with respect to the hospital’s operational and financial challenges, in line with EMMA postings.
The parties within the discussions first agreed to a First 2024 Supplemental Indenture after which, more recently, to a Second 2024 Supplemental Indenture. The second indenture specifies the bondholders will get additional liens to incorporate additional real property, subject only to the liens present in the bridge security package guiding the brand new loans.
The hospital didn’t make rent and bond trustee payments from March to July. It had been working to merge or ultimately affiliate with HumanityCorp, but that fell through. The bond trustee took motion to speed up payment of all outstanding bonds in early August.
The hospital didn’t make an interest payment in early September and the bonds remain due in full.
Jackson Hospital engaged Allen Wilen, partner at Eisner Advisory Group, because the chief restructuring officer in early September.
In June, Moody’s Rankings cited the hospital’s severely deteriorated cash-flow and financial position and said the hospital suffered from very weak financial strategy and risk management, management credibility and track record. Moody’s subsequently withdrew its rating resulting from insufficient information.
S&P Global Rankings lowered the hospital debt to D in September and subsequently withdrew the rating.
There have been two hospital defaults this yr following 4 in 2023, in line with the November 20 issue of MMA’s Default Trends.
There are 46 hospital bonds currently impaired.
UMB Bank is the bond trustee and Kramer Levin Naftalis & Frankel is the law firm representing the bondholders.