Promise Healthcare Group – Seeks Approval for Bidding Procedures and Stalking Horse Bid Protections for $63mn Sale to Select Medical

December 26, 2018 – Promise Healthcare Group requested Court approval of (i) bidding procedures in respect of the sale of the certain assets (the “Select Assets”) to Select Medical Corporation, (b) stalking horse bid protections in respect of the sale and (iii) procedural steps related to the sale [Docket No. 355]. 

 

The sale motion explains, “To date, the Debtors have negotiated and executed, subject to approval by this Court, an asset purchase agreement (the ‘Select Purchase Agreement’) with Select Medical Corporation (the ‘Select Purchaser’) for substantially all assets (collectively, the ‘Select Assets’) of Promise Hospital of Florida at the Villages, Inc., HLP Properties at the Villages, L.L.C., Promise Properties of Lee, Inc., Promise Hospital of Lee, Inc., Promise Hospital of Dade, Inc., and Promise Properties of Dade, Inc. (collectively, the ‘Select Sellers’)….The purchase price for the Select Assets under the Select Purchase Agreement is $63,000,000, subject to certain adjustments as provided in the Select Purchase Agreement, which will be subject to higher or otherwise better offers pursuant to and in accordance with the Bidding Procedures.

 

Pursuant to the Select Purchase Agreement and Bidding Procedures, in the event the Select Purchaser is not the Successful Bidder for all of the Select Assets (or otherwise does not purchase all of the Select Assets as a Backup Bidder), the Select Purchaser is to be provided protections by way of an expense reimbursement not to exceed $250,000 and a break-up fee in an amount equal to $1,890,000 (which is three percent (3%) of the Select Purchaser’s Purchase Price), as more specifically set forth in section 5.6(i) of the Select Purchase Agreement. The Bid Protections were necessary for the Select Purchaser to enter into the Select Purchase Agreement. The work that the Select Purchaser performed through its diligence adds value to the Debtors’ estates as the time required for other Potential Bidders to perform diligence should be shortened permitting more Potential Bidders to participate in the contemplated process under the proposed timetable. In addition, the presence of the Select Purchaser sets a floor for the value of the Select Assets and attracts other potential buyers to bid for such assets, thereby maximizing the realizable value of the Select Assets for the benefit of the Debtors’ estates, their creditors and all other parties in interest.”

 

The Court (i) scheduled a sale hearing for February 26, 2019 and (ii) set a bid deadline of February 15, 2019, with objections due by February 18, 2019.