Hammond Hanlon Camp LLC Advises on the Sale of Fairmont General Hospital to Alecto Healthcare Services
Sale transaction concluded through Chapter 11 bankruptcy process
CHICAGO – On September 19, 2014, Fairmont General Hospital and Subsidiaries (“FGH” or the “Hospital”) completed the sale of its 140-bed hospital and affiliates to Alecto Healthcare Services, Inc. (“Alecto”). Hammond Hanlon Camp LLC (“H2C”), a healthcare-focused strategic advisory and investment banking firm, served as exclusive financial and restructuring advisor to FGH, leading the operational improvement and sale process to conclusion through a Chapter 11 bankruptcy filing.
FGH initially engaged H2C in September 2013 to seek a strategic partner, and later requested H2C to assist in obtaining debtor-in-possession (“DIP”) financing and to provide operational restructuring services to the organization. With the underlying property owned by the City of Fairmont under a legacy agreement, along with declining operations and a competitive marketplace, FGH and H2C anticipated there would be many challenges associated with conducting a regional and national partner search process for this Medicare-dependent hospital.
H2C managed a multiple track process to stabilize operations, obtain DIP financing and identify interested parties. With operations stabilized and a new budget developed, DIP financing was secured in November 2013 and Confidential Information Memoranda were distributed to prospective buyers. As a result of the Hospital’s improved financial position, the first draw down of DIP funds was not required until late December 2013.
“The H2C team provided exceptional guidance throughout the bankruptcy process to stabilize operations, identify a partner and secure healthcare in our community for the future,” said Mike Martin, Chairman of the Board of Fairmont General Hospital.
Through a carefully managed sales process that highlighted the Hospital’s quality performance, essentiality in its service area, and compelling investment opportunity, competitive bids were narrowed down in early 2014 and a final bidder selected by FGH only after careful negotiation of an asset purchase agreement. With the cooperation of creditors and their representatives, the asset purchase agreement was signed in May 2014, and the regulatory process initiated with the City of Fairmont and the State of West Virginia.
“The Fairmont General Hospital transaction was a unique challenge,” said Michael Lane, Managing Director at H2C. “Obviously the Hospital was struggling financially. With local not-for-profit healthcare organizations not interested in affiliating with FGH, filing bankruptcy was necessary to provide time to execute a turnaround and simultaneously find a new partner outside the immediate market area. In addition, the land under the Hospital was owned by the City of Fairmont, making an asset sale even more complex. All the parties potentially impacted by the loss of a hospital in the community came together; the city, state, and creditors all worked collaboratively to execute an asset sale and transfer of all assets, including land, to Alecto.”
About Fairmont Regional Medical Center
(formerly Fairmont General Hospital)
Fairmont Regional Medical Center operates a 140 bed acute care facility in Fairmont, WV. The Hospital provides the full spectrum of inpatient and outpatient acute care services in Marion County, WV, and also provides inpatient and outpatient behavioral services to the surrounding community.
About Alecto Healthcare Services Inc.
Alecto Healthcare Services LLC is a newly formed healthcare company whose vision focuses on the ways in which health care should be managed in today’s current climate of healthcare reform. Through its commitment to integrity and innovation, Alecto seeks to improve upon the healthcare infrastructure one hospital at a time. In addition to Fairmont General Hospital in Fairmont, WV, Alecto operates two hospitals in California and a hospital in Texas.
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