Saint Vincent Catholic Medical Centers requests OK of bid procedures for Queens hospitals sale

By Caroline Salls

Pittsburgh, May 10 - Saint Vincent Catholic Medical Centers requested court approval of the bidding procedures for its proposed sale of Mary Immaculate Hospital and St. John's Queens Hospital, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Caritas Health Care Planning, Inc., an affiliate of Wyckoff Heights Medical Center, has been selected as the stalking horse bidder.

Under the stalking horse agreement, Caritas will issue a $36.5 million primary note and $5 million of additional notes.

The primary note will have a term of five years, with a Libor plus 550 basis points floating rate, reset monthly.

The additional note will have a term of two years, with the same floating interest rate as the primary note.

In addition, at any time before the third business day before the bid deadline, Caritas can elect a $35 million cash payment option.

The purchase agreement also includes assumption of a two-year lease for Parsons Manor, with three options to renew the lease for an additional year.

Under the lease agreement, Caritas will pay $1 million in annual rent, with a 2.5% increase per year.

Caritas will have an option to buy Parsons Manor for $12.5 million, and if it elects the cash option, Parsons Manor will be included in the purchased assets.

Caritas will a $500,000 deposit upon execution of the purchase agreement and another $250,000 upon entry of the sale order.

If Caritas is not the high bidder, Saint Vincent will pay it a $1 million break-up fee and $400,000 in expense reimbursement.

Competing bids must be for at lease $41.65 million, including at least $14.15 million in cash, or for at least $43.15 million, including not more than $19 million in seller financing and at least $1.65 million in cash if Parsons Manor is included.

All bids must be accompanied by a deposit of 2.5% of the purchase price or $750,000.

The minimum initial overbid will be $250,000 more than the purchase price, and subsequent bids must be for $100,000 more than the previous bid.

According to the motion, Saint Vincent cannot afford to continue to operate the hospitals, has been unable to improve their operating performance and does not have the financial resources to fund the required capital improvements at these hospitals.

Saint Vincent requested a hearing on the bid procedures be held May 17.

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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