Newspaper article The Florida Times Union

Methodist Bondholders Balk at Deal

Newspaper article The Florida Times Union

Methodist Bondholders Balk at Deal

Article excerpt

The initial effort to get bondholders of Methodist Medical

Center to renegotiate their debt to pave the way for a merger

with University Medical Center appears to have taken off like a

lead balloon -- with a resounding thud.

So far, those holding about $80 million in Methodist bonds show

little indication that they're ready to sign off on any union

that Gainesville-based Shands HealthCare is proposing for

Jacksonville's Northside.

"Whatever they cook up, they are not going to be allowed to

serve to us," said James Baker, an executive with The GMS Group,

an Atlanta-based investment firm that both owns and has sold the

affected bonds.

Methodist has lost money for five straight years and has been

up for sale in the past. Still, the hospital is worth more than

the face value of its bonds, Baker said.

In March, Methodist's chief Marcus Drewa angered Baker and

others holding the hospital's tax-exempt bonds by informing them

they would likely receive less than the value of their

investment in a forthcoming deal.

At the time, Shands officials indicated they needed to trim the

$186 million in debt held by University and Methodist to make

the deal feasible.

Drewa also asked these 2,800 anonymous bondholders to identify

themselves and indicate whether they would be willing serve on a

creditor committee to discuss the situation.

Out of 400 responses received two weeks ago, only 16

bondholders indicated a willingness to participate, said Louie

Casey, an official of American National Bank, the bonds'

trustee.

"If they can't put together anybody to talk to, it will be

difficult to have a meeting," he said.

Restructuring Methodist's debt requires the consent of at least

half of those holding Methodist bonds as well as those holding

more than half the dollar value of the bonds, Casey said.

Drewa expressed hope that despite the lackluster response from

bondholders, a deal including his hospital can still be worked

out.

"We're very optimistic about working out an arrangement," he

said.

In his March notice, Drewa had indicated that the details of

the proposal would be forthcoming within 90 days. …

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