Atlanta, Georgia (April 12, 2004) - SunLink Health Systems, Inc. (Amex: SSY) today announced that it has entered into a definitive agreement to sell its Mountainside Medical Center hospital in Jasper, GA, to Piedmont Medical Center, Inc. for approximately $40 million. SunLink said it expects to report an after-tax gain of approximately $13.5 million from the sale. SunLink also said it expects to record charges of approximately $3.1 million to write down certain assets retained in the sale and charges relating to the early retirement of debt. The transaction, which is subject to various conditions and approvals, is expected to be completed in SunLink's fourth fiscal quarter ending June 30, 2004. SunLink said it will retain Mountainside's working capital, except for inventory, and that it intends to use the net proceeds from the sale to repay debt and related costs with the balance retained for working capital.
Commenting on the sale, SunLink's Chairman and Chief Executive Officer, Robert M. Thornton, Jr., said, "This sale furthers several of our key corporate and operational objectives and, we believe, reflects the value inherent in our hospital portfolio. We believe this sale will greatly benefit SunLink and our shareholders by:
- substantially reducing our debt,
- more than doubling our shareholders' equity,
- positioning SunLink to continue to make capital improvements in our remaining seven hospitals, and
- positioning SunLink to continue to grow by prudently pursuing acquisitions that complement our hospital portfolio."
Mr. Thornton continued "Additionally, this transaction will allow us to focus more sharply on our core operating strategy of being a quality healthcare provider to exurban and rural communities. The Mountainside service area of Jasper and Pickens County is a fast-growing area in the northern Atlanta MSA which is increasingly taking on characteristics different from our business strategy but complementary to Piedmont's strength. We are confident that Piedmont, one of Atlanta's premier medical centers, will continue to provide the Mountainside service area with outstanding medical resources."
SunLink also said that, predicated upon the sale and application of proceeds to retire debt, it has received initial proposals from lenders for new senior and mezzanine credit facilities to provide up to $40 million for hospital capital projects, selective acquisitions, and other corporate purposes. SunLink cautioned that there can be no assurance, even if the sale of Mountainside Medical Center is completed, that any suitable credit facility providing for the corporation's desired amount and use of proceeds will be available on satisfactory terms.
SunLink Health Systems, Inc. currently operates eight community hospitals and related businesses in the Southeast and Midwest, including Mountainside Medical Center. Each SunLink facility is the only hospital in its community. SunLink's operating strategy is to link patients' needs with dedicated physicians and health professionals to deliver quality, efficient medical care in each community it serves.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the Company's business strategy. These forward-looking statements are subject to certain risks, uncertainties and other factors, which could cause actual results, performance and achievements to differ materially from those anticipated. Certain of those risks, uncertainties and other factors are disclosed in more detail in the Company's Annual Report on Form 10-K for the year ended June 30, 2003 and in its Form S-4 relating to the HealthMont merger dated August 11, 2003.
