St. Francis, HMC fight over hospital deal - The Business Journal of the Greater Triad Area:

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million in loan payments to St. Franci s Healthcare System of Hawaii during its 10 monthx in bankruptcy and is planning to sue the sisterseof St. Francis, claiming that the hospitalsw were over valued at the time of the sale inJanuaryh 2007. According to papers filed this week inbankruptcyy court, St. Francis, which sold its Lilihza and Ewa hospitalsfor $68 million, is objecting to a reorganizationh plan filed by HMC on March 30. The plan claima that the sale wasa "fraudulent and that the price should be lowered according to St. Francis' court filing. "Rathedr than blaming their failure on the Sistereof St.
Francis, it is time for Hawaii Medicaol Center to admit that ithas failed,"saicd Sister Agnelle Ching, St. Francis chiefv executive officer. Badr Idbeis, chairman of the Hawaii MedicaCenter board, said: "We're trying to ask the judge to reducew the amount of payment. We have no intentiojn of ever suing St. Francis. If our reorganization plan is approvedr we will bedefinitely successful." HMC filef for Chapter 11 bankruptcy reorganization last August to buy time to reversed it money-losing operation and prevent the closure of its two hospitals after one of its lenderds threatened to freeze operating cash. St.
Franci is asking the bankruptcy court to allow other interestexd parties to submitreorganization plans. St. Francis claimx that at the time ofthe sale, HMC made only the down paymentt of $6.5 million in cash for the hospitals. The rest $40.2 million and working capitalo financingof $8.97 million — was financedd by St. Francis. Hawaii Medical Center agreed topay $1 million per year over 25 yearx in monthly land lease payments to St. HMC’s failure to maintain its financial commitmeny hasimpacted St. Francis' healty care ministries. HMC also failed to finance capital improvements, whichn was a major factorr in St.
Francis’ decision to select HMC as the buyer forthe hospitals, St. Francis said in a presas release. “We did not want to file an but we were given no choice becauseof HMC’ws claims in its proposed plan of reorganization,” said Sister Agnellee Ching. HMC, the state's only physician-owned, for-profit hospitals, was formed as a partnership of CHA an affiliateof , and more than 130 Hawaii-basec doctors under Hawaii Physician Grou p LLC.