Hospital authority announces $91.7 million transfer agreement

Agreement Ensures Continued Operation of HUMC as a Full Service Acute Care Community Hospital and Full Payment of Outstanding Balance on Bonds Guaranteed by the City of Hoboken
HOBOKEN, NEW JERSEY – The Hoboken Municipal Hospital Authority today announced that it has voted to authorize the execution of an agreement to transfer ownership of Hoboken University Medical Center (HUMC) to HUMC Holdco LLC, an entity whose principals have common ownership with nearby Bayonne Medical Center. The total value of the transaction is approximately $91.7 million, and it ensures that HUMC will remain open as a full-service, acute-care, community hospital for at least seven years while retaining jobs in the City of Hoboken.
Under the authorized agreement, HUMC Holdco will pay in cash the full outstanding balance of the
$52 million bond obligation guaranteed by the City of Hoboken upon closing of the transaction. HUMC Holdco will also assume certain liabilities and has earmarked more than $20 million for investment in HUMC. The City of Hoboken will not receive any funds as part of the transaction.
Following execution of an agreement, and before the transaction can be finalized, certain conditions must be satisfied that include a review by the New Jersey State Department of Health and Senior Services, through the Certificate of Need process, which includes a public hearing process.
“One of my most important priorities when I took office was to ensure that our Hospital would remain a full service acute care facility and to relieve our City of the significant obligations associated with its $52 million bond guarantee,” said Mayor Dawn Zimmer. “This Agreement satisfies both of these important objectives and is a significant milestone for our City.”
“This is a significant milestone,” said Toni Tomarazzo, Chairperson of the Hoboken Municipal Hospital Authority. “The comprehensive process to identify a potential buyer for the Hospital has been ongoing for almost a year. The Authority’s Request for Proposals (RFP) was issued in late July 2010 and set forth the Authority’s clear objectives: to maintain the facility as an acute-care hospital, to preserve the jobs, to continue the valuable working relationship with the medical staff of the Hospital, and to relieve the City of Hoboken of its bond guarantee obligations.”
“The Authority has worked diligently since signing a Letter of Intent with the Purchaser in January 2011 to negotiate and finalize the terms of the Agreement,” added Tomarazzo. “There is still much work to be done before the transaction can be finalized, but we are optimistic that we will be able to proceed expeditiously toward a closing.”
“The Hospital, like many stand-alone community-based medical facilities, faced a challenging fiscal position,” said Steven Rofsky, Chair of the Authority’s Finance Committee. “This Agreement will help our Hospital thrive while at the same time relieving our City of the risk associated with the $52 million bond guarantee.”   
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