A court hearing on a dispute between Highmark Inc. and West Penn Allegheny Health System Inc. over their failed $475 million merger agreement will continue Thursday in Pittsburgh.
West Penn, with $737 million of bond debt, is one of the biggest junk issuers in the municipal marketplace. The major bond rating agencies have it under review and Fitch Ratings last week lowered West Penn three levels, to CCC from B-plus.
Judge Christine Ward of the Allegheny County Court of Common Pleas heard two days of testimony late last week. Each Pittsburgh company has accused the other of contract breach.
Blue Cross Blue Shield insurer Highmark is looking to restrain West Penn from talking with other suitors. West Penn, the second-largest health provider in western Pennsylvania, says Highmark violated the agreement when its new chief executive, William Winkenwerder, insisted it file for bankruptcy to minimize its debt.
West Penn on Monday reported a net loss of $37.8 million and an operating loss of $113 million for its fiscal year.
In its annual report, West Penn cited reduced volumes due to closure of services at its West Penn Campus facility. It also said additional volume expected by physician recruitment by Highmark did not materialize in 2012.