California Hospital With $193 Million Muni Debt Files Bankruptcy

(Bloomberg) — A California hospital about 70 miles north of Sacramento filed for Chapter 11 bankruptcy on Monday after it was unable to sell itself or affiliate with a larger hospital system.

Nonprofit Oroville Hospital is struggling to pay off $193 million in outstanding municipal debt used to finance a new tower. According to a local news report, construction of the facility was completed in March, but its opening was delayed as the hospital awaited government approval.

“We believe this application is an important step towards securing the hospital’s long-term future as a vital healthcare provider and employer for our community,” the hospital said in a statement. The statement was included. “The purpose of the application is to facilitate a court-supervised transaction with a partner who has the resources and operating experience to invest in the hospital and continue its mission for the benefit of all our stakeholders.”

Oroville Hospital took out nearly $196 million in municipal debt in 2019 to expand the 133-bed facility to 211 beds. Oroville Hospital bonds last traded for 74 cents on the dollar on Nov. 17.

The hospital, which has been operating since 1962, said its facilities will remain open during the bankruptcy process. Oroville Hospital also operates 31 clinics in Butte County.

The hospital retained Cain Brothers, a healthcare investment banking firm and division of KeyBanc Capital Markets, to advise it on selecting an partnership partner. FTI Consulting acts as financial advisor.

The case is Oroville Hospital, case number 25-26876, in the U.S. Bankruptcy Court for the Eastern District of California.

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