Medical Properties Trust (MPW) announced today that Yale New Haven Health System will pay $45 million to Prospect Medical Holdings and, in return, will be released from its obligation to purchase three Connecticut hospitals that it had agreed to acquire in 2022. The settlement is part of the resolution of Prospect’s Chapter 11 bankruptcy and is subject to approval by the bankruptcy court overseeing the case.
MPW expects to apply the $45 million settlement payment to reduce its outstanding debtor‑in‑possession (DIP) loan balance, which currently stands at $105 million. In addition, the company has sold two Phoenix, Arizona facilities for approximately $50 million pursuant to a tenant purchase option, and the proceeds will be used for debt repayment, investment, and general corporate purposes.
Prospect has entered into definitive agreements with operators to purchase two of the Connecticut facilities, and is in discussions for the third. These sales, like the Yale settlement, are also subject to court approval and will further reduce the DIP loan exposure, moving MPW closer to eliminating its remaining DIP commitment of up to $30 million secured by assets.
The combined effect of the Yale settlement and the sale of the Phoenix and Connecticut properties represents a substantial liquidity event for MPW, improving its balance sheet, reducing leverage, and supporting the company’s goal of repaying the $105 million DIP loan and potentially eliminating its remaining DIP obligations.
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