Highmark starts process of buying West Penn's $710M in debt
Highmark Inc. has issued a formal offer to buy West Penn Allegheny Health System's $710 million in bond debt, a key piece of its deal to acquire the financially troubled hospital operator.
Highmark said on Friday that investors holding West Penn Allegheny's debt have until April 26 to agree to sell the bonds at a discount.
The state's largest health insurer previously reached an agreement with bond investors to buy the debt for 87.5 cents on the dollar, for a total of $620 million.
“Highmark is making the tender offer in anticipation of moving forward with its proposed affiliation with West Penn Allegheny Health System,” the insurer said in a statement.
“The tender offer is the next step in Highmark's plan to create an integrated delivery network” that will compete with UPMC, the largest hospital network in Western Pennsylvania.
Highmark's proposed acquisition of West Penn Allegheny is under review by the state Insurance Department.
The insurer has asked that the department make a decision by April 30, when Highmark's purchase agreement with the hospital system expires.
Insurance Commissioner Michael Consedine has said he is aware of the deadline but won't be rushed into making a decision.
If the department does not issue a ruling by the end of the month, Highmark's tender offer to bondholders could be extended, as could its deal with West Penn Allegheny.
Highmark has said it lined up a $600 million loan to purchase the bond debt, which it will hold on its books for three years. At the end of that period, West Penn Allegheny is expected to issue new bonds and buy back the debt from Highmark.
The insurer also has agreed to give West Penn Allegheny $475 million, of which $300 million is loans.
West Penn Allegheny and its five hospitals would be the core of Highmark's new health system, which so far includes about 150 physicians, a large outpatient medical center in Pine, and Jefferson Regional Medical Center in Jefferson Hills.
St. Vincent Health System in Erie also has agreed to be acquired by Highmark.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Fed speculation fuels stock gains; Dow rises 100 points
- UPMC buying New Castle-based Jameson Health System
- Mylan cuts ties with NFL star charged with child abuse
- 2 top executives at Dick’s Sporting Goods to retire
- Budweiser’s parent firm wants to buy Miller’s parent company
- Pa. considers $300,000 plan to clean polluted site in Kennedy
- Small lenders seek to thrive in tough era