Hunter
10/20/23
Preston Hollow Community Capital, Mercy Iowa City’s largest bondholder and winner of an auction for its assets last week, is accusing the hospital of refusing to move forward with the transaction.
The Gazette reports Preston Hollow revealed their winning bid was $1 million more than the University of Iowa’s final bid of $28 million. Their offer included $1.2 million in cash to cover additional operating losses incurred by the hospital for the period between November 15th and 30th. The other $27.8 million was a credit bid, part of over $63 million Mercy owes Preston Hollow and master trustee Computershare.
Preston Hollow agreed to further cover operating losses past November 30th until the closing date, on or before February 29th.
At issue is the phrase “operating losses.” Preston Hollow says the standard business definition is expenses exceeding available funds to pay for those expenses. Mercy Iowa City wants the available funds from the Mercy Hospital Foundation to not be included when calculating ordinary losses.
Preston Hollow says that interpretation would place significant additional financial burden on them, and was not agreed to by their representative at auction. They’ve petitioned the court to rule on the impasse.