Prime Healthcare Services was selected as the new owner of Saint Michael’s Medical Center in Newark.The winning figure, after 17 rounds of bidding, was $62 million. The bid put Prime ahead of Prospect Medical Holdings. Prospect bid $63 million, but a breakup fee for Prime would put Prospect’s bid $500,000 below its rival’s.
The final bid meets the minimum requirements of bond trustee New York Mellon, which filed a last minute objection to the sale, stating that a $60 million minimum would be required.
“It’s been a long and arduous process,” said Saint Michael’s CEO and President David Ricci.
Saint Michael’s was forced into Chapter 11 bankruptcy protection in August, when the state did not sign off on its sale to California-based Prime, which had been under review for more than two years. Subsequently, Prospect and Prime emerged as two prospective buyers.
U.S. Bankruptcy Court Judge Vincent Papalia ruled that bids for Saint Michael’s had to meet or beat Prime’s offer — which was $49 million, in addition to investing $25 million in the facility and keeping it open for five years.
In addition to the $13 million above to the stalking horse bid, Prime also agreed to invest a total of $50 million in capital improvements, rather than $25 million, over the next five years.
“Almost three years ago, Prime came to the table with the best offer to sustain the medical center,” Ricci said. “Today, they remain a committed partner and have renewed that commitment by paying $62.2 million and improving several material terms of their asset purchase agreement. Most critically, the Prime sale will ensure that Saint Michael’s has a vibrant future, continues to serve the community and preserves the more than 1,400 jobs of its dedicated staff.”
“The bankruptcy auction process brought out the best in these two high quality bidders. The board considered every aspect of the offers and meticulously exercised its fiduciary duty in selecting Prime. The hospital is looking forward to presenting Prime’s bid to the bankruptcy court for approval on Thursday and hopes that, given this rigorous sale process, the state will quickly issue all regulatory approvals,” said Michael Sirota, attorney for Saint Michael’s.
A hearing before Papalia is scheduled for Thursday, at which Prime will be recommended to the judge, who will ultimately approve or deny the sale.