MedCath Announces Agreement to Sell Hualapai Mountain Medical Center to Kingman Regional Medical Center

MedCath Corporation MDTH announced today it has entered into a definitive agreement to sell substantially all the assets of Hualapai Mountain Medical Center in Kingman, Ariz., to Kingman Regional Medical Center. MedCath also announced today that on or before Sept. 30, 2011, it will close the 70-bed Hualapai Mountain Medical Center, subject to regulatory requirements. MedCath is notifying all employees at Hualapai Mountain Medical Center of the decision and providing the staff with advance termination notice. MedCath will offer severance to staff at the facility who are eligible under MedCath policy if they are not hired by KRMC. MedCath is also providing notice to the applicable regulatory authorities of its plans to close the facility, as well as physicians practicing at the hospital. Following required regulatory notifications, an appropriate plan for the wind down of patient care operations will be implemented. The transaction valued the assets of Hualapai Mountain Medical Center, along with 18.6 acres of adjacent undeveloped land, at $31.0 million plus retention of working capital. Anticipated net proceeds to MedCath, including benefits from the liquidation of retained accounts receivable and realization of tax losses on the sale, and after closing costs, payment of known liabilities and the currently anticipated acquisition of the partnership's minority investors' ownership in accordance with the terms of an agreement entered into by MedCath and the minority partners of the hospital, is anticipated to total approximately $42.0 million.