Aug. 5 bid deadline set for Forum sale
By WILLIAM K. ALCORN
YOUNGSTOWN
Forum Health is one step closer to emerging from bankruptcy.
U.S. Bankruptcy Judge Kay Woods on Tuesday set Aug. 5 as the deadline to submit bids to buy the health system. She also set a hearing on the bids for Aug. 10 as part of her approval of the bidding process.
Ardent Health Services, the only bidder to date, agreed this month to purchase Forum for $69.8 million.
Forum attorney Shawn Riley called the judge’s actions the “final steps” in Forum Health’s effort to satisfy creditors in the bankruptcy process.
In addition, Ardent, based in Nashville, Tenn., pledged in its purchase proposal to hire Forum’s employees, keep its three major hospitals open and invest $50 million to $70 million over five years on renovations, new equipment and other upgrades.
Ardent negotiated concessions from Forum’s unionized employees detailed in memorandums of understanding, which were the subject of considerable debate in court and in chambers.
Judge Woods eventually ruled that the memorandums of understanding between Ardent and Forum’s unions would not be available to any subsequent bidders or anybody else as requested by Forum’s major secured creditors, known as the “consent parties.”
But she also said the parties must be kept informed during the sale process.
Riley said that initially there were 58 potential bidders for Forum Health, which was honed down to five by Forum’s board of trustees, with Ardent emerging as the leading bidder.
Riley said Ardent’s bid combined with the debt-service reserve fund and other assets would result in a $120 million net profit from the sale.
Should Ardent not be the winning bidder, it would be entitled to so-called “breakup” compensation, which was the other main item of contention during the court hearing that lasted much of the day.
The hearing was to have begun at 9:30 a.m., but attorneys representing Forum, the secured creditors and Ardent did not emerge from chambers until 11 a.m. At that point, the hearing was recessed until 1 p.m. But when Judge Woods said she would not approve the breakup package as proposed by Forum, the attorneys went back into chambers for an additional 45 minutes, emerging at 3 p.m.
Initially, Forum proposed to pay Ardent 3.2 percent of $94 million, which included the purchase price and various other cost items and amounted to about $3 million as a breakup fee.
Judge Woods said the amount was too much, and she would not approve that formula.
After negotiations in chambers, the parties and Judge Woods agreed that Ardent would be paid 3.2 percent of the $69.8 million purchase price plus other costs, including reimbursement of expenses capped at $1,750,000. The total breakup compensation would be about $2.1 million.
At one point in the discussion, when Atty. Victoria Powers, representing Ardent, thought that Judge Woods meant there would be no breakup compensation, she said Ardent might walk away from the deal if there was no breakup fee.
Judge Woods said her main interest is making sure the playing field for any bidders is fair and level.
Powers argued that any bidder had the same opportunity as did Ardent to negotiate with the unions. She said the unions are waiting for people to talk to them.
Forum’s three major unions agreed that they are still willing to talk to any bidder that matches Ardent’s proposal.
Forum has between 3,500 and 4,000 employees at its hospitals: Northside Medical Center, Youngstown; Trumbull Memorial Hospital, Warren; and Hillside Rehabilitation Hospital in Howland.
Atty. Sean Grayson, general counsel for American Federation of State, County and Municipal Employees Union Council 8, said the unions are “very pleased” with Judge Woods’ approval of the sale process.
AFSCME locals represent nurses and other employees at various Forum facilities.
“We don’t know if there are or will be other bidders. But, we’ll talk to any bidder who is willing to hire Forum’s employees and keep its hospitals open and make the kind of investments that Ardent has promised,” Grayson added.