Tentative deal reached
Unity Point acquisition of CIH could come in late April
DES MOINES – Unity Point Health-Waterloo will become the owner of Central Iowa Healthcare if Federal Bankruptcy Judge Anita Shodeen approves an asset purchase agreement between the two.
Attorneys for CIH and Unity Point Health said they can work out the details and submit the agreement to Shodeen for her review. She is expected to make the decision in two weeks.
If Shodeen’s decision is favorable, the closing could come as soon as the end of April.
Those were key results which came out of a hearing Thursday afternoon in U.S Bankruptcy Court for the Southern District of Iowa in Des Moines.
UPH-Waterloo told the court it is offering to purchase substantially all CIH assets for $11.9 million.
CIH would cease as independent hospital if the court approves the sale to UPH-Waterloo.
“We are excited about the future of healthcare in our community and the commitment UPH-Waterloo brings,” said COO/Acting CEO Dawnett Wilis and President of the Board of Trustees Carol Hibbs in a joint press release immediately following the hearing. “This is the first day of our new beginning. Today, the bankruptcy court provided conditional approval of the purchase of CIH by UPH-Waterloo. The transaction will receive final approval after negotiation, execution and bankruptcy court approval of the final asset purchase agreement within the next two weeks. Prior to the closing CIH will continue to operate on a “business as usual basis”.
Earlier this week attorneys for the numerous parties involved, as well as CIH staff and trustees, worked hundreds of hours collectively to structure the tentative deal.
“A group from the CIH Board (of trustees) and professional team (key administrative staff) worked into the night (to 11 p.m. Wednesday night) with the UPH-Waterloo team to develop a transaction term sheet,” said Hibbs in a text to the Times-Republican Thursday morning.
That work ended just a few minutes before the 1:30 p.m. start for Thursday’s court hearing.
“The term sheet filed with the court today and summarizes the transaction indicates Unity Point will hold sessions to acquaint CIH employees with terms and conditions of Unity Point employment and encourages all CIH employees to apply for Unity Point employment,” said the press release.
“As part of the hearing today, CIH received conditional and interim approval to receive additional financing from United Bank,” said the press release. “We hope to not need the funding, but will hold it as a safety reserve to provide additional assurance to the community of CIH’ ability to comply with its obligations prior to the transaction closing.”
CIH filed for Chapter 11 Bankruptcy Dec. 20.
Chapter 11 is a legal process designed to help organizations continue operations, sell assets and restructure liabilities. The bankruptcy was mitigated by months of serious financial losses.
A report by CIH Director of Finance Mary Pfantz at the Jan. 10 corporate membership meeting revealed CIH lost $15,119,319 as of Nov. 30, 2015. One year later – as of Nov. 30, 2016, the loss had increased $3.6 million to $18,741,619.
CIH and U.S. Bankruptcy Court
Shortly after Dec. 20, the bankruptcy court issued a notice It would set in motion a process whereby the court and a committee of vendors would begin determining payments, if any, to vendors owned money.
At its annual meeting Jan. 10, CIH corporate members approved by 88-0 vote authorizing the sale to UPH-Waterloo
Representing CIH Thursday were bankruptcy attorneys Jeff Goetz, of Bradshaw, Fowler Proctor & Fairgrave of Des Moines and Mark Melickian of Sugar, Felsenthal, Grais and Hammer LLP of Chicago, Ill.
They were joined by financial consultants Ronald Winters and Krista Lovingfoss of Alvarez & Marsal of New York City, N.Y. Also in attendance were attorneys and representatives for numerous vendors owed money by CIH.
They included Marshalltown entities Great Western Bank, CBC, and United Bank and Trust.
CIH trustees present were Hibbs, Jim Lowrance, Mike Mason and Sharon Greer.
Also present was Labor Relations Specialist Kathy Sandvik for the Minnesota Nurses Association, an affiliate of National Nurses United, and an attorney for the NNU. Sandvik said MNA represents 88 nurses employed by CIH.
A number of CIH nurses and administrative staff, including Willis, watched the proceedings.
About UnityPoint Health – Waterloo
Unity Point Health – Waterloo includes Allen Hospital, a 204-bed, non-profit community hospital, two critical access hospital, an outpatient community mental health center, a nursing and allied health college and 26 family practice and specialty clinics serving the Cedar Valley. As an affiliated hospital of Unity Point Health, the organization is part of a health system that cares for one out of every three patients in Iowa.
Headquartered in Marshalltown, CIH is a 103-year old, not-for-profit organization, employing approximately 500 healthcare and other professionals.
Assets include a 49-bed acute care hospital, emergency department, and outpatient clinic in Marshalltown.
Additionally it has four primary care clinics in Conrad, Marshalltown, State Center and Tama-Toledo.
CIH is the only full-service medical center in its area and more than 60,000 residents utilize it for a wide variety of healthcare services.