Winning offer for IHS is appealed

Bankruptcy court sets hearing on challenge to bid for nursing home giant

January 28, 2003|By M. William Salganik | M. William Salganik,SUN STAFF

Trans Healthcare Inc., which signed an agreement last month to buy Integrated Health Services Inc. out of bankruptcy reorganization, challenged yesterday the apparent winning bid for the nursing home operator headquartered in Sparks.

Integrated Health announced Friday that Abe Briarwood Corp. had topped Trans Health- care's bid in an auction conducted Wednesday in U.S. Bankruptcy Court in Wilmington, Del.

The Briarwood bid is not really higher than his company's offer, Anthony Misitano, Trans Healthcare's chief executive officer, said yesterday. Trans Healthcare filed its objections yesterday in the bankruptcy court.

A hearing has been set for tomorrow in bankruptcy court.

Doug Morris, an Integrated Health spokesman, said yesterday that he could not respond in detail to the Trans Healthcare challenge, but noted, "It was a court-supervised auction."

Tony Gilburt, a partner in the Baltimore office of the accounting and consulting firm Reznick Fedder & Silverman who represented Briarwood in the deal, said yesterday that his client "is looking to take this company [Integrated Health] and operate it."

Integrated Health, which has been in bankruptcy reorganization for just under three years, has about 675 employees in Sparks and about 39,000 at 180 nursing homes in 25 states and a related therapy company.

Last month, Trans Health- care announced an agreement to buy Integrated Health for $97.5 million in cash and the assumption of about $230 million in liabilities.

From its headquarters in Camp Hill, Pa., Trans Health- care currently operates 94 nursing homes in 12 states, including nine in Maryland. It said it would move its headquarters to Sparks if the sale were completed.

Although he said he could not discuss Briarwood's plan in detail, Gilburt said: "At this time, we have no intention of moving" the headquarters in Sparks.

Integrated Health announced Friday that Briarwood had submitted "the highest and best bid."

But in its objection, Trans Healthcare said Briarwood's offer of $110.5 million in cash was reduced by a $7.5 million escrow fund for Medicaid claims. Therefore, Trans Healthcare argued, Briarwood did not meet a court requirement that bids be at least $10 million higher than Trans Healthcare's bid of $97.5 million.

Also, the Trans Healthcare court filing said, Briarwood hadn't agreed to assume certain liability claims. Nor had it matched Trans Healthcare's five-year commitment to lease the Sparks headquarters, reducing the value of the bid, the court filing said.

Trans Healthcare also alleged that the court's order for the auction said any bidder had to provide "proof of managerial capacity sufficient to consummate the proposed transaction."

"Briarwood admittedly is not the operator of nursing and therapy facilities and, to THI's knowledge, does not have any agreement with such an operator or management personnel," Trans Healthcare alleged.

Morris, the Integrated Health spokesman, said he could not discuss Briarwood's plans or capabilities.

The chain's news release Friday said: "Briarwood is financially sponsored by Cammeby's International Limited, a privately held diversified real estate holding company with significant assets under management."

Cammeby's did not return phone calls seeking comment. Among Cammeby's holdings is an interest in New York's landmark Woolworth Building.

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