Health system asks Penn. judge to rule quickly on Highmark deal
PITTSBURGH Nov 2 (Reuters) - An adviser to ailing West Penn Allegheny Health System urged a Pennsylvania judge on Friday to make a quick decision about whether West Penn can escape a soured $475 million merger with insurer Highmark Inc.
West Penn -- which is likely to go bankrupt without another investor -- argued that it should be allowed to negotiate with new suitors. Highmark is seeking an injunction that would keep the regional healthcare provider tied to its original union.
"We're running out of time right now," West Penn's adviser and former board chairman David McClenahan testified. "We lose money every day. If there isn't going to be a deal with Highmark, we need to know it and we need to act on it."
Allegheny County Judge Christine Ward presided over four days of testimony spread over the last two weeks in a Pittsburgh courtroom. She won't rule on whether to block West Penn until after both sides submit additional information on Wednesday.
West Penn says Highmark, under a new CEO, began insisting that it file for bankruptcy to reduce its debt load before Highmark would consummate the deal.
Highmark has already provided $225 million to help keep struggling West Penn afloat. West Penn issued $737 million of municipal bonds in 2007.
Each has now accused the other of breaching their agreement.
State insurance regulators suggested in a letter to Highmark that they were more likely to sign off on the merger if West Penn first filed for bankruptcy to reduce its debt, according to evidence Highmark presented at the hearing. West Penn officials said they never got that message from their meetings with regulators.
In court on Friday, McClenahan said there were alternatives to a bankruptcy.
Currently, West Penn pays a 5 percent interest rate on its debt of roughly $800 million, McLenahan said. If it merges with Highmark, the combined entity could easily afford the $40 million payment for its debt service, he said.
If Ward stops West Penn from searching for other takers, McClenahan said the struggling health system could sink deeper under water.
Highmark CEO William Winkenwerder told the court last week that voiding the merger would raise medical costs in the region because of a lack of competition with the behemoth UPMC health system.
"At the end of the day, it's extremely important to this community," Winkenwerder testified.
- Malaysian plane presumed crashed; questions over false IDs |
- China draws 'red line' on North Korea, says won't allow war on peninsula
- Warning shots fired to turn monitors back from Crimea |
- Libya threatens to bomb North Korean tanker if it ships oil from rebel port