Natchez Regional granted $1.5M line of credit
NATCHEZ — The Adams County Board of Supervisors ratified Thursday an agreement that will extend a $1.5 million line of credit to Natchez Regional Medical Center through the end of April.
The agreement came after the supervisors met with the county-owned hospital’s attorney, Walter Brown.
The line of credit with United Mississippi Bank has actually been in existence since 2008, supervisors’ attorney Scott Slover said, but has been reduced from $3 million to the current $1.5 million.
“We have the framework in place to extend it long-term, over the course of the hospital’s bankruptcy, if it is needed, which is more than likely,” Slover said.
The line of credit has been used to finance the hospital’s patient accounts receivable.
The hospital filed a petition for Chapter 9 bankruptcy in federal court Wednesday, a move hospital administrators said was necessary to keep the doors open as the hospital’s financial obligations exceed its assets.
The line of credit required the supervisors’ approval, but it does not obligate the county to pay, Supervisor Mike Lazraus said.
Even though NRMC is county-owned, its finances are kept independent from the county books and it does not receive tax support.
As part of the agreement to the line of credit, however, the hospital will provide the bank and the county board weekly updates on its finances. An independent accounting firm, the Horn Group, will verify the numbers, Slover said.
“Every week (NRMC) will submit to the bank and to the supervisors a 26-week projection, which will include what it is making, what it is losing and what they think they will make,” he said.
When the supervisors asked Brown if they would be getting a copy of the hospital’s audit, he said the accounting firm has not released it yet.
A draft of the audit was provided to the bank as required for the financing papers, but it has not been finalized, Brown said.
“If you want financial information, read the petition for bankruptcy, which is about 100-pages long,” he said. “You will have all the information about the hospital you need. It will tell you all you need more easily than the audit.”
Brown also told the supervisors he hoped the hospital would have a letter of intent from a buyer within the week.
The letter of intent might have come sooner, he said, but something at the corporate level with the buyer which had “nothing to do with our proposition” set it back a couple of days.
The hospital’s bankruptcy petition said it anticipated a signed letter of intent by today.
Slover said criticism of statements about when a potential buyer might become public was perhaps well warranted in light of similar projections made in the past, but he felt optimistic.
“We would want to release that information as soon as possible, because that will give the hospital the stability it needs and its creditors the stability they need,” Slover said.
NRMC opened in 1960 as Jefferson Davis Memorial Hospital. Its $2.4 million construction was underwritten by an $800,000 local contribution and state and federal funds.
It has been financially independent since 1974, but is backed by a 5-mill standby tax that the Mississippi Development Bank required the hospital get in 2006 when it asked for the MDB to reissue its revenue bond.
The hospital previously entered bankruptcy in February 2009 and exited it in December of that year. It has been on the market for potential buyers since July.