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WASHINGTON, DC, May 24, 2014 /24-7PressRelease/ -- Specialty Hospitals of America LLC - which operates the only Long-Term Acute Care Hospitals (LTACH) in the greater metropolitan area surrounding and including Washington, DC, as well as the area's only nursing home facilities licensed for residents requiring ventilators - today announced agreements which, if approved, will enable it to continue providing vital services without disruption to its more than 300 patients and residents, their families, and the Company's more than 750 employees.
The loan and sale agreements mark the culmination of a four-month strategic process conducted by Specialty Hospitals of America's Board of Directors and senior management, with the assistance of independent advisors, to put Specialty Hospitals of America (SHA) in a financially viable position and avoid an access to care crisis for highly vulnerable populations in the region. SHA facilities are recognized for providing exceptional levels of patient and resident care based on performance in such industry standard metrics as infection rate, fall rate, and pressure wound rate.
Under the terms of the agreements between SHA and Silver Point Capital, SHA will receive $15 million in new capital and will sell substantially all of its assets through a court-supervised sale process. Accordingly, SHA today filed a series of petitions in the U.S. Bankruptcy Court for the District of Columbia (the Bankruptcy Court) to commence a Chapter 11 process, including a motion to convert the pending involuntary bankruptcy petition, made last month by certain third parties, to a Chapter 11 restructuring (collectively, the Chapter 11 Cases). Silver Point Capital is a private investment firm focused on credit and special situations investments.
The sale agreement and the agreement for a $15 million in Debtor-in-Possession (DIP) loan are subject to bankruptcy court approval.
All SHA facilities are open and operating today as usual, and admitting new patients and residents under normal procedures.
Throughout the sale process, which is proposed to be completed in approximately 90 days, SHA will continue normal business operations and expects to obtain court approval to:
- Pay employee wages and benefits without interruption and fulfill all obligations under existing collective bargaining agreements; and
- Pay vendors and suppliers in the normal manner for all goods and services provided during the Chapter 11 sale process.
"Our new financial agreements are a lifeline for saving a vital regional healthcare resource and averting the immediate and ongoing healthcare crisis that would ensue in the greater Washington, DC metropolitan area if SHA's facilities were forced to close," said SHA's President and Chief Operating Officer, Frank Wilich. "Licensed long-term acute care facilities occupy a critical position in any region's continuum of care, allowing hospitals both to discharge patients more frequently and admit new patients more frequently. There are no other licensed long-term acute care facilities in the metropolitan area."
"The agreements we reached, if approved, mean that patients in our care recovering from critical and complex injuries can remain safely where they are with the same physicians and nurses, and close to their loved ones. Moreover, future patients in our region requiring long-term acute care - about 1500 annually - will retain their local resource, as will referring hospitals. Likewise, these agreements spare our employees the stress of deciding whether to relocate to a region with licensed LTACH facilities or search locally for a position that does not fully utilize their training, qualifications and expertise," Mr. Wilich added.
The Company's legal advisors are Pillsbury Winthrop Shaw Pittman LLP, its investment banker and financial advisor is Cain Brothers, and its financial/restructuring advisor is Alvarez & Marsal.
Long term acute care hospitals (LTACHs) have been established to concentrate on medically complex and critically ill patients. LTACHs provide highly specialized care to promote and optimize recovery potential. LTACHs are typically designed to offer patients a longer length of stay and a more resource-intensive level of physician and nursing care, along with individualized therapies.
The Specialty Hospitals of Washington are accredited by The Joint Commission and provides healthcare services to adult patients (pediatric services exempt) and residents and prohibits discrimination based on race, religion, gender identity or expression, sex, sexual orientation, national origin, age, physical or mental disability, marital status, personal appearance, family responsibilities, political affiliation, matriculation, or status as a covered veteran in accordance with applicable federal, state and local laws.
This Press Release may include statements considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. All statements, other than statements of historical facts, are forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. Although we believe that in making any such forward-looking statement our expectations are based on reasonable assumptions, any such forward-looking statements involve uncertainties and risks, including without limitation:
- our ability to obtain the approval of the Bankruptcy Court with respect to motions to be filed in the Chapter 11 Cases;
- the effectiveness of the overall restructuring activities and any additional strategies we employ to address our liquidity and capital resources during the Chapter 11 Cases
- the terms and conditions of any reorganization plan that is ultimately approved by the Bankruptcy Court in the Chapter 11 Cases;
- the effect of the Chapter 11 Cases on customer, employee and vendor relationships;
- our ability to remain in compliance with all regulatory requirements and the DIP loan;
- our ability to maintain or obtain sufficient financing sources for operations or to fund any reorganization plan and meet future obligations;
Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of them; nor can we assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. As such, you should not unduly rely on such forward-looking statements.
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