Verity Health System of California, Inc. (Verity Health), a nonprofit healthcare system, today filed a motion in the U.S. Bankruptcy Court in Los Angeles seeking bankruptcy court approval to initiate a sale process of Verity Healths remaining four hospitals.
The process is being led by an asset purchase agreement with The KPC Group, (the Buyer) where the $610 million offer serves as an initial stalking horse bid to acquire the following facilities, and related assets, all located in California, under Section 363 of the U.S. Bankruptcy Code: St. Francis Medical Center in Lynwood, St. Vincent Medical Center in Los Angeles, Seton Medical Center in Daly City and Seton Coastside in Moss Beach.
Verity Health has requested court approval of an orderly sale process where other potential buyers may submit qualified competing bids against the Stalking Horse Bid. The winning bid, as selected by the Verity Health Board of Directors, in consultation with its professional legal and financial advisors, is subject to the approval of the Bankruptcy Court, and, depending on the buyer, the California Attorney General.
When we began this process, our goal was to ensure these important historic institutions continue to provide the high-level of care local communities need and deserve. We have reached an exciting milestone as we get closer to this goal becoming a reality, said Rich Adcock, CEO of Verity Health. Verity has remained committed to finding the right partner to provide uninterrupted service and operations for all employees, physicians and patients, and we will continue that commitment as this process advances.
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The KPC Group is also focused on enhancing the health and welfare of communities, and looks forward to serving patients in Los Angeles and San Mateo Counties.
We are excited about the future of these hospitals, and we look forward to the opportunity of continuing their excellent track record of care in the communities they serve, said Peter Baronoff, CEO and Managing Director at The KPC Group.
Additional details of the asset purchase agreement
Pursuant to the terms of the agreement, the Buyer has agreed to acquire substantially all assets at the following facilities for a total purchase price of $610 million.
The KPC Group has also agreed to make offers of employment to substantially all employees at these facilities, including full-time, part-time, those on short-term or long-term disability or on leave of absence.
To facilitate an orderly and efficient sale process for all of its six hospitals and related assets, Verity Health filed for Chapter 11 protection on August 31, 2018. For more information on the historical challenges that led to this filing, please refer to Verity Healths press release, which can be viewed via this link. Verity Health also secured debtor-in-possession financing of up to $185 million. This additional liquidity enables continued operations without interruption to high-quality patient care, employees and vendors throughout the Chapter 11 process.
On December 27, 2018, the County of Santa Claras bid to acquire two of Verity Healths other hospitals, including OConnor Hospital in San Jose, Calif. and Saint Louise Regional Hospital in Gilroy, Calif., was approved by the U.S. Bankruptcy Court in Los Angeles in a sale process also under Section 363 of the U.S. Bankruptcy Code.
The asset purchase agreement and all relevant court documents can be accessed using this link. For questions from patients, suppliers and other parties, please call Verity Healths helpline at (888) 249-2741.
Verity Health is advised in this matter by Dentons US LLP, Berkeley Research Group and Cain Brothers.
Verity Health System
Verity Health is a nonprofit healthcare system. Its hospitals include 1,650 inpatient beds, six active emergency rooms, a trauma center and a host of medical specialties including tertiary and quaternary care. Veritys two Southern California hospitals are St. Francis Medical Center in Lynwood and St. Vincent Medical Center in Los Angeles. In Northern California, OConnor Hospital in San Jose, St. Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City and Seton Coastside in Moss Beach are part of Verity Health.
Verity Health also includes Verity Medical Foundation. With more than 100 primary care and specialty physicians, VMF offers medical, surgical and related healthcare services for people of all ages at community-based, multi-specialty clinics conveniently located in areas served by the Verity hospitals.