Georgia proton center bondholders will take haircut after bankruptcy sale

Natalia Merzlyakova AdobeStock

Holders of $550 million of unrated senior and subordinate tax-exempt bond debt issued by the Georgia ProtonCare Center, Inc. will take a significant haircut after the bankruptcy court on Monday approved a sale for less than $110 million.

Emory University, the stalking horse bidder, bought the struggling cancer treatment center, which was owned by Provident Resources Group and managed by the GPCC.

Emory already oversees and manages the facility.

Emory's stalking horse bid carried the support of the majority of senior bondholders as represented by bond trustee UMB Bank NA. The $110 million bid would cover roughly 20% of all outstanding bond debt. Assuming only the $310 million of senior bonds get repaid, as outlined by the indenture, it would mean a 65% haircut for senior holders, and nothing for subordinate holders.

The bonds have recently traded at deep discounts, according to the Electronic Municipal Market Access website. An odd lot of senior bonds due in 2035 with a 6.75% coupon sold for 30.66 on March 10. Roughly $6 million of the senior bonds sold for 30 on Jan. 29, days following the bankruptcy. That's up from 20 cents on Oct. 28, 2025.

Some of the subordinate zero-coupon bonds due in 2044 and 2048 traded for less than a penny on April 23 and April 13, according to EMMA.

The Chapter 11, filed Jan. 22 in the U.S. Bankruptcy Court for the Northern District of Georgia, comes after years of struggle and defaulted bond payments from Georgia's only proton therapy cancer treatment center.

Provident purchased the center in 2016 after an initial group of investors ran out of money and halted construction. The Atlanta Development Authority floated the unrated debt in 2017, and the center's doors opened in 2018.

The first-day declaration estimated senior principal of roughly $242.7 million plus accrued and unpaid interest of about $67.6 million, and subordinate principal of approximately $207.5 million plus accrued and unpaid interest of about $32.4 million.

The debtors blamed insufficient patient revenue for the financial troubles. Primary revenue sources of Medicare, Medicaid, commercial insurance and private pay "do not provide the debtor with sufficient income to service the debtor's significant debt obligations," chief restructuring officer Darryl Myers said in the first-day declaration.

Bondholders have a security interest in all of the center's assets and cash. Emory will acquire the building, parking lot, land and a 90-ton cyclotron that generates proton particles for precision cancer treatment, along with five treatment rooms and additional imaging equipment, the university said.

UMB made an initial distribution in February of $23 million to holders out of certain trustee-held funds, including payment of some defaulted interest, which is the full amount of funds held by the trustee after its fees and expenses, including counsel fees, and a contingency holdback in the amount of $5 million, according to a January EMMA filing.

It's one of several municipal bond-financed proton centers facing distress across the country. Several of the facilities are owned by the Public Finance Authority.