(Bloomberg) — Medical Properties Trust Inc., one of the largest U.S. hospital owners, moved to take control of three Southern California health care entities after the owner — Prospect Medical Holdings — was accused of defaulting on debt.
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MPT has requested the resignation of board members of three units so they can be replaced by MPT-appointed independent directors, according to a Nov. 18 letter to Prospect from MPT, a copy of which was seen by Bloomberg News. The company also warned Prospect that MPT could still foreclose on properties if the defaults are not settled.
MPT confirmed the request on Tuesday, saying in a statement that its relationship would remain as owner of the Prospect property and “will continue to have no involvement in the hospital’s operations.”
“As disclosed in MPT’s recent earnings call, Prospect did not pay cash rent during the third quarter as its liquidity continues to be impacted by ongoing sales operations in various East Coast markets,” an MPT spokesperson said in the statement. “As a result, MPT has asserted its right to appoint new independent directors to the board of directors of certain potential entities.”
The targets include one of Prospect’s leading entities, Alta Hospital System, which owned three hospitals when Prospect bought the company in 2007. The purchase marked the beginning of Prospect’s experiment in what it calls “regional coordinated care,” which aims to boost profits by providing Medical services in the country. More efficient area.
Representatives for Medical Properties Trust and Prospect Medical did not respond to requests for comment.
Medical Properties Trust purchases medical facilities and leases them back to operators. In 2019, Prospect sold several properties to MPT as part of a $1.55 billion deal.
MPT announced the restructuring of its agreement with Prospect last year after months of missed rent payments. Under the deal, MPT terminated holding more than $1 billion in assets related to Prospect. The health care company has refinanced some debt, but still owes hundreds of millions of dollars to its owner and other lenders.
The owner has tangled with other medical companies that operate hospitals on property owned by MPT. Bankrupt hospital operator Steward Health Care System has accused Medical Properties of improperly interfering with a court-approved plan to sell some properties to repay creditors.
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