County approves sale schedule; Sept. 11 date set for NRMC auctionPublished 12:12am Tuesday, July 22, 2014
NATCHEZ — Barring a blocking petition from the local electorate, Natchez Regional Medical Center will go to auction at 10:30 a.m. Sept. 11.
The Adams County Board of Supervisors adopted a resolution Monday setting an advertising schedule for the auction that will precede the county hospital’s presumptive sale to Community Health Systems.
Under the resolution, the first advertisement for the auction will be published Aug. 1.
Bidders must be qualified by Sept. 8, and the actual auction will follow three days later.
In the court order signed by Judge Neil Olack, the minimum qualifications for bidders include:
4Owning and operating at least two general acute care hospitals, at least one of which must be located in Mississippi, Alabama, Louisiana, Tennessee, Arkansas, Florida, Kentucky, Georgia or Texas.
4Annual net patient revenues in excess of $200 million and net assets in excess of $100 million or the backing of a partner that can provide up to $30 million in market-based financing for the purchase.
For single general acute care hospitals seeking to bid on NRMC, requirements include:
4Annual net patient revenues of at least $100 million and net assets of at least $50 million, or the backing of a partner that can commit to provide up to $30 million in market-based financing for the purchase.
A Mississippi academic medical center and its affiliated organizations would also be considered a qualified bidder under the court order.
The starting bid for the auction will be the $18 million in total consideration from CHS as the stalking horse bidder. Any subsequent bid would have to be “substantially similar” in what the bidder agrees to purchase.
Once the auction has closed and the county has a finalized price for the hospital, the federal bankruptcy court will approve a plan for how the money will be distributed to the hospital’s creditors, Board of Supervisors Attorney Scott Slover said.
In the court-approved bidding process, a qualified bidder would have to outbid CHS by at least $1 million, and every subsequent bid would have to outbid the previous bid by $100,000.
The $1 million initial overbid requirement is to cover the cost of the stalking horse. In stalking horse agreements, the stalking horse bidder has a built-in financial incentive in case they are outbid because of the presumed risk they are taking on by being the stalking horse.
The court’s approved stalking-horse fee for CHS is $500,000.
Once the notice advertising the sale is published Aug. 1, county residents have the option of filing a petition, asking to take the sale to a voter referendum for approval. The petition would require 1,500 signatures to take the matter to a vote.
If a successful petition is not filed, the hospital can go to sale without further objection.
During Monday’s meeting, the supervisors also accepted the resignation of hospital trustee Lionel Stepter, who recently moved out of the area.
When Supervisor Mike Lazarus asked if the board would be appointing a new member, President Darryl Grennell said he did not see the point.
When CHS signed the stalking horse agreement two weeks ago, trustees chairman LeRoy White said the job of the hospital board at this point is to maintain operations until it is time to hand over the keys.
After accepting Stepter’s resignation, the supervisors adopted a resolution of commendation for his service.
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 and does not receive tax support, but is backed by a 5-mill standby tax that the Mississippi Development Bank required the hospital to get in 2006 when it asked for the MDB to reissue its revenue bond.
The hospital board of trustees announced in February its intention to declare bankruptcy, citing at the time a $3 million deficit between financial assets and liabilities.