Citrus Memorial Faces Bankruptcy Without Hospital Corp. Lease Deal
NEW YORK (The Deal) -- Citrus Memorial Hospital could be facing bankruptcy protection if it doesn't complete a lease transaction with Hospital Corp. of America
The Inverness, Fla.-based 198-bed community hospital, which is located roughly 75 miles north of Tampa and is officially called Citrus Memorial Health Foundation, is confident that the transaction will be completed this fall and that payments from HCA on the lease deal will be used to repay its outstanding bond debt, said Citrus Memorial spokeswoman Katie Mehl in a phone interview Thursday.
The hospital is operated by Citrus Memorial Health under a long-term lease with Citrus County Hospital Board. Through the transaction, the board will lease the facility to Hospital Corp. of America and Citrus Memorial Health Foundation will step out, Mehl explained.
The hospital is a not-for-profit facility, but under a new lease with HCA, the latter will operate it as a for-profit enterprise, Mehl said.
She wouldn't comment on the exact value of the transaction, but said that it will provide Citrus Memorial will enough proceeds to repay the company's bond debt, cover its employee pension costs and leave "many millions left over" to be used for charity care in the community, among other things. Mehl explained that HCA would likely make an up-front payment for the lease.
"We are hoping to have a definitive agreement in the next few months and close in the fall," she said.
Citrus Memorial has two series of secured bonds, the first issued in 2002 and the second issued in 2008. The $37.46 million outstanding on its 2002 bonds bear interest between 6.25% and 6.375%, and have a final maturity of Aug. 15, 2023.
Meanwhile, the $7.65 million outstanding on its 2008 bonds are priced at 1.2% and mature on Oct. 1, 2018.