A Western Pennsylvania judge on Friday afternoon granted Highmark Inc.'s motion for a preliminary injunction againstWest Penn Allegheny Health System, the Pittsburgh Tribune-Review reported.
The ruling by Christine Ward of the Allegheny County Court of Common Pleas means West Penn, teetering under $737 million of junk-level bond debt, cannot negotiate with other suitors. West Penn is one of the largest speculative-grade issuers in the municipal marketplace.
West Penn, the second-largest health care provider in the region behind the University of Pittsburgh Medical Center, broke off the announced $475 million affiliation agreement with Highmark on Sept. 30 after new Highmark chief executive William Winkenwerder insisted that West Penn file for bankruptcy protection. Winkenwerder wanted to minimize his organization's debt exposure.
Highmark had infused West Penn with $200 million in equal parts grants and loans after the two Pittsburgh companies announced the agreement last November. Had Ward ruled against the injunction request, West Penn could have kept the money.
West Penn's predecessor organization, the Allegheny Health, Education, and Research Foundation, filed a $1.3 billion bankruptcy in 1998. West Penn emerged from the demise of AHERF and sold $430 million of bonds in 2000 to finance its creation.
All three major bond rating agencies have placed West Penn under review. Fitch Ratings and Standard & Poor’s rate the system B-plus and B-minus, respectively, while Moody’s Investors Service assigns its Caa1 rating.
