LOS ANGELES — Officials at Downey Regional Medical Center are probably wondering if five will be their lucky number after the bankrupt Southern California hospital announced the fifth postponement of a planned bond buyback Monday in a disclosure filing.
The number did seem to hold luck for the nonprofit when a bankruptcy judge approved its fifth amended reorganization plan two weeks ago.
“We have just been working out a million details since the judge confirmed the plan,” Rob Fuller, the hospital’s executive vice president and chief operating officer, said of the delays.
Though the latest disclosure filing on the Municipal Securities Rulemaking Board’s online EMMA platform said bondholders will be notified if there are delays beyond the planned buyback next Tuesday, hospital officials don’t expect any.
“The main thing [causing the delay] was the Downey City Council had to approve the deed of trust to the lender,” Fuller said. “Once it was approved by the City Council, it took the lawyers a couple of weeks to finish the paperwork.”
Fuller said they expect to close as planned next Tuesday.
Under the exit strategy, $32.2 million of bonds would be sold privately to RCB Equities #1 LLC, according to bankruptcy documents. The Downey hospital would also receive a loan from MidCap Financial LLC in the amount of $20 million, the filing states.
The bankruptcy exit plan calls for the hospital to pay holders in full for its $20.6 million of outstanding tax-exempt debt, issued in 1993 through the California Health Facilities Financing Authority. The hospital has remained current on debt service during its two years in bankruptcy.
Downey appeared close to reaching a deal with RCB in October, but talks ground to a halt when the company proposed an operating agreement in addition to the loan.
Fuller said the hospital then nearly closed a replacement deal with Avanti that would have included shared services between the four-hospital chain and Downey, but the deal collapsed when Avanti dropped its price. Simultaneously, RCB returned with a better offer that included it dropping its demands to be involved in hospital operations, he said.
“It’s a little hard to compare the offers, because they are so different,” Fuller said. “But RCB was offering more on a cash basis.”