UPDATE: MedCath Sells Bakersfield Heart Hospital To Cardiovascular Care Group; Provides Guidance for Pending Dissolution Filing
MedCath Corporation (Nasdaq: MDTH) announced that it entered into a definitive equity purchase agreement and completed the sale of its 53.31% equity interest in Bakersfield Heart Hospital ("BHH") and its secured loans to BHH to Cardiovascular Care Group ("CCG"). The transaction was effective June 30, 2012. Navigant Capital Advisors provided advisory services to MedCath related to the transaction.
The purchase price for MedCath's equity interest and secured loans is approximately $38.1 million subject to post-closing working capital adjustments. MedCath anticipates it will receive approximately $34.0 million in cash from the transaction after payment of taxes and closing costs. By completing this transaction, MedCath has realized the value of BHH reflected in its March 31, 2012 Form 10- Q filed with the United States Securities and Exchange Commission (the "SEC") on May 10, 2012. The anticipated net cash proceeds do not include an estimate of BHH's liability, if any, retained by MedCath arising out of the Department of Justice's ("DOJ's") national investigation regarding implantable cardioverter defibrillators (the "ICD Investigation") . The purchase agreement obligates MedCath to indemnify CCG for 53.31% of BHH liabilities arising out of the ICD Investigation for the period prior to closing.
"We have now sold all 10 of our hospitals since announcing in March 2010 that we had formed a Strategic Options Committee to consider the sale either of the entire company or our assets," said Art Parker, MedCath's CEO. "We're proud of the focus we always maintained during this process on high-quality patient care, and we wish the new owners great success."
On August 17, 2011, MedCath filed a proxy statement with the SEC (the "Proxy") seeking stockholder approval of a plan of complete liquidation and dissolution of the Company (the "Plan of Dissolution"). The stockholders of MedCath approved the Plan of Dissolution on September 22, 2011.
MedCath's Board of Directors believes the conditions outlined in the Proxy to file a certificate of dissolution in accordance with Section 275 of the General Corporation Law of the State of Delaware ("DGCL") (the "Filing") by September 22, 2012 have been satisfied. As a result, the Company currently anticipates making the Filing on or about September 22, 2012 and making a liquidating distribution to its stockholders as part of the Plan of Dissolution prior to the Filing (the "Pre-Filing Distribution") currently estimated to be in the range of approximately $5.75 to $6.25 per share.
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