Verity Health System of California – Designates Santa Clara County as Stalking Horse Bidder with $235 million Bid, Bid Protections Include $9.4 million Breeak Fee

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October 1, 2018 – Verity Health System of California requested a  Court order that would (i) approve the form of its Asset Purchase Agreement (the “Stalking Horse APA”) which designates Santa Clara County as the stalking horse bidder for two hospitals in Santa Clara County (ie Saint Louise Medical Center and O’Connor Medical Center, collectively, the “Purchased Assets”) with a stalking horse bid of approximately $235 million and (ii) approve certain format, bidding procedures and stalking horse bid protections [Docket No. 365]. The motion explains, “A bid submitted will be considered a Qualified Bid only if the bid is submitted by a Qualified Bidder and complies with all of the following (a ‘Qualified Bid’): a) it states that the applicable Qualified Bidder offers to purchase, in cash, some or all of the Purchased Assets… if the bid is for some or all of the Purchased Assets, it must have a value to the Debtors, in the Debtors’ exercise of its reasonable business judgment, after consultation with its advisors and the Official Committee, that is greater than or equal to the sum of the value offered under the Stalking Horse APA plus the amount of the Break-Up Fee and $7,500,000 (the bidding increment)….In recognition of this expenditure of time, energy, and resources, the Debtors have agreed that if the Stalking Horse Purchaser is not the Successful Bidder as to the Purchased Assets, the Debtors will pay the Stalking Horse Purchaser at closing of the sale of the Purchased Assets an amount in cash equal to $9,400,000.00, plus repayment of the Expense Reimbursement. The Break-Up Fee shall be payable at closing of the sale from the sale proceeds.”

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