The board of the bankrupt Sierra Kings Healthcare District in California earlier this month approved a letter of intent to join Adventist Health.
The agreement also needs approval from district voters and regulators. The ballot measure goes to district voters on June 7.
The small public hospital district, located in the Central Valley near Fresno, will ask voters to allow it to lease its facilities and sell other assets to Roseville-based Adventist Health, which would take over operations.
The district, comprised of a hospital and five clinics in Reedley, filed for bankruptcy in October 2009 after discovering management had spent $1.7 million of bond funds on operating expenses and misspent other funds. The district collects taxes to pay for voter-approved general obligation bonds.
Sierra Kings had $34 million of outstanding debt as of the June 30.
As part of the deal, the district will retire $7.5 million of revenue bonds, according to a statement by Adventist.
The U.S. Bankruptcy Court for the Eastern District of California has already protected the hospital district’s GO bonds from the bankruptcy process.
