Steward Health Care has taken steps to secure $225 million in financing from existing lenders, a move aimed at maintaining operations at its healthcare facilities currently up for sale amidst its bankruptcy proceedings. This infusion of capital comes at a critical time, with Steward reportedly facing imminent financial strain.
The bankruptcy filing, which occurred on May 6, signaled significant financial challenges for the for-profit healthcare system. However, the newly secured loan is expected to provide the necessary financial cushion to sustain operations until fall, thereby mitigating concerns expressed by government officials regarding patient care quality.
In its filing seeking approval from the bankruptcy court, Steward highlighted the first-in, last-out debtor-in-possession (FILO DIP) loan as the optimal financing option to navigate the Chapter 11 proceedings and ensure ongoing efforts to maximize asset value. The loan structure allows for immediate access to $75 million, with an additional $150 million available in increments not exceeding $50 million per draw.
The lenders providing the FILO DIP loan include WhiteHawk Finance LLC, Owl Creek Investments I, LLC, OneIM Fund I LP, MidOcean Credit Fund Management, and Brigade Capital Management, LP. John Castellano, Steward’s chief restructuring officer, emphasized the significance of this financing arrangement in stabilizing operations and supporting stakeholders such as physicians, employees, patients, and vendors.
Prior to this development, Steward had secured $75 million in debtor-in-possession financing from Medical Properties Trust, which holds the real estate assets of Steward’s hospitals. This additional financing marks a substantial step forward in the organization’s efforts to navigate its financial challenges and maintain continuity in its healthcare services.
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