Investment Groups Reach Agreement on Loan for Orange County Hospitals
Costa Mesa-based Integrated Healthcare Holdings said in a public filing Monday that it will allow Orange County Physicians' Investment Network three more months to pay $15 million in overdue loan payments, the Orange County Register reports (Wolfson, Orange County Register, 5/25).
Integrated Healthcare on May 16 said that OCPIN's debt had caused the investment group to go into default on a $50 million loan it secured from Medical Capital to finance a deal in which Integrated Healthcare purchased four Orange county hospitals from Dallas-based Tenet Healthcare (California Healthline, 5/18). OCPIN controls 84% of Integrated Healthcare.
Anil Shah, head of OCPIN and chair of Integrated Healthcare's board, at the time of the default notice said that the $15 million payment was not required because it was part of a loan that fell through. Shah said Tuesday that OCPIN decided to pay the money because "[w]e want to put this dispute behind us and we believe that a higher capitalization for the company is better for us."
Under the new agreement, OCPIN will pay its $15 million obligation to Integrated Healthcare in three $5 million installments. More than half of OCPIN's shares in Integrated Healthcare will go into escrow while the firm makes payments. With each $5 million payment, one-third of the shares in escrow will be returned to OCPIN. If the group fails to make the payments on schedule, its stake in Integrated Healthcare will be reduced to minority status.
Medical Capital must sign off on the agreement.
In related news, the Orange County Board of Supervisors on Tuesday agreed to transfer the county contracts for indigent care, Medicare and Medi-Cal from Tenet to Integrated Healthcare, the Register reports. Integrated Healthcare President Larry Anderson testified before the board and said that the four hospitals are "doing very well."
Board Chair Bill Campbell said he wanted confirmation from Integrated Healthcare in the next two weeks that the loan agreement has been finalized (Orange County Register, 5/25).