Steward Health Care Secures $225 Million in Additional Funding amid Chapter 11 Case
Steward Health Care System LLC Secures $225 Million in Funding to Continue Operations Amid Bankruptcy Proceedings
In a crucial development for Steward Health Care System LLC, the company has successfully secured $225 million in additional funding to support its operations as it navigates through Chapter 11 bankruptcy proceedings in U.S. Bankruptcy Court in Houston.
The debtor-in-possession (DIP) financing, provided by the FILO lenders holding first liens, comes after an intense and competitive process led by Steward’s investment banker, Lazard Freres, and its independent transformation committee. The company emphasized the urgency of this funding in an emergency motion seeking court approval, with a hearing scheduled before U.S. Judge Christopher Lopez on Thursday.
John R. Castellano, the company’s chief restructuring officer, underscored the critical need for immediate access to additional financing to stabilize operations, retain employees, and ensure the continuity of essential supplies and services. Without this funding, Steward faced the risk of significant adverse impacts on its businesses, patients, and communities.
Earlier in May, Steward had received $75 million in DIP financing from Medical Properties Trust (MPT), its landlord and investor. However, MPT opted not to provide further funds, prompting Steward to seek alternative financing options. A recent hearing ruled in Steward’s favor, allowing the company to secure the necessary funds to continue its operations.
The $225 million funding is essential for Steward to complete the sale of its 31 hospitals across eight states, including prominent facilities like Trumbull Regional Medical Center in Warren, Hillside Rehabilitation Hospital in Howland, and Sharon Regional Medical Center in Sharon, PA. The company is also in the process of selling its managed-care business, which includes a network of 4,000 physicians.
Steward’s Chapter 11 filing in May revealed a debt of $900 million and revenue of $600 million. The company’s ability to secure this additional funding is a significant step towards stabilizing its operations and ensuring the continuity of healthcare services for its patients and communities.
As the proceedings continue, Steward remains focused on fulfilling its obligations and restructuring its operations to emerge stronger from the bankruptcy process. The support from the FILO lenders and the approval of the court provide a much-needed lifeline for Steward Health Care System LLC during this challenging period.
