Exhibit 99.4
FOR IMMEDIATE RELEASE Contact:Deborah H. Frankovich
Senior Vice President & Treasurer
281-774-5100
PARACELSUS HEALTHCARE CORPORATION FILES VOLUNTARY
PETITION FOR CHAPTER 11 BANKRUPTCY PROTECTION
TO FACILITATE DEBT RESTRUCTURING
Hospital Subsidiaries to Continue Normal Operations and Continue Fulfilling
Payroll, Vendor and Patient Obligations in the Normal Course of Business
Two-Thirds of Holders of Note Debt Support Reduction and Conversion of
Outstanding Debt to New Debt and Equity Ownership
$62 Million Subsidiary-Level Credit Facility Available
For Hospital Funding Needs
HOUSTON, Texas (September 15, 2000) - As part of its previously announced effort
to restructure its capital obligations, Paracelsus Healthcare Corporation
(OTCBB:PLHC) today filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code with the United States Bankruptcy Court for the Southern
District of Texas. The bankruptcy filing is limited to the parent company
("PHC"), and does not include any of PHC's hospital subsidiaries. Simultaneously
with the commencement of its bankruptcy case, PHC filed a Plan of Reorganization
(the "Plan") pursuant to which PHC will effect its capital restructuring. PHC
elected to seek Court protection in order to facilitate the restructuring of its
debt while continuing to maintain normal business operations in PHC's hospital
subsidiaries. PHC took this step with the support of the holders of at least
two-thirds of the principal amount of PHC's $325.0 million 10% Senior
Subordinated Notes (the "Notes"). PHC anticipates that the current directors and
officers will continue in place subject to supervision by the Bankruptcy Court.
Because PHC's hospital subsidiaries have not filed for bankruptcy
protection, the hospital subsidiaries are expected to continue paying, in the
ordinary and normal course of business, all wages, benefits and other employee
obligations, as well as all outstanding and ongoing accounts payable to their
contractors and vendors. The hospitals remain open and will continue providing
the same high level of care that their patients have always received.
"The Chapter 11 filing is an important step in Paracelsus Healthcare
Corporation's plans to reduce debt, stabilize our capital structure, and enhance
our ability to invest in the future growth potential of our hospital operations.
The Plan of Reorganization promulgated by PHC will achieve a necessary
restructuring of PHC's capital structure. If the Plan is approved by the
Bankruptcy Court in the form substantially as proposed, we expect PHC and its
subsidiaries to be capable of generating net income post restructuring. We are
pleased that our Plan of Reorganization has received the support of the holders
of at least two-thirds of our debt. We are also gratified by the support we have
been receiving from our employees, physicians, vendors, and the communities we
serve," stated Robert L. Smith, Chief Executive Officer.
PHC also noted that a recently completed $62 million credit facility,
secured at the subsidiary level, will not be directly affected by PHC's filing
and, combined with cash on hand, is expected to be sufficient to meet the
working capital and capital expenditure needs of the hospital subsidiaries
during the restructuring process.
PHC's decision to restructure its debt was due to its highly leveraged
capital structure. Despite positive EBITDA from hospital operations, the high
interest burden has severely impacted PHC's reinvestment opportunities. In an
effort to conserve capital and to preserve the normal operations of the
operating subsidiaries, PHC did not make its interest payments on the Notes due
February 15 and August 15, 2000.
PHC has been in negotiations with the Note holders. Holders of at least
two-thirds of the principal amount of the Notes support the principal financial
terms of PHC's Plan and, subject to certain conditions, have indicated an intent
to vote in favor of the Plan. On the effective date of the Plan (the "Effective
Date"), all principal and interest outstanding on the Notes will be exchanged
for (i) the reorganized PHC 11.5% Senior Notes (due on August 15, 2005) in the
aggregate principal amount of $130.0 million (the "New Notes"), and (ii) 95.0%
of the reorganized PHC common stock, subject to dilution through the exercise of
the Series A Warrants and Series B Warrants (as referred to below). Interest on
the New Notes shall accrue commencing on August 15, 2000. The Plan also provides
for the holders of PHC's common stock as of the Record Date (as defined in the
Plan) to (i) receive 5.0% of the reorganized PHC's common stock, (ii) receive
warrants (the "Series A Warrants") to purchase prior to the fifth anniversary of
the Effective Date (as defined in the Plan) an additional 9.64% of the
reorganized PHC's common stock (exercisable at $320.0 million enterprise value
of the reorganized PHC), and (iii) receive warrants (the "Series B Warrants") to
purchase prior to the first anniversary of the Effective Date an additional 2.0%
of the reorganized PHC's common stock (exercisable at $100.0 million value of
the reorganized PHC's common stock). The Plan would make its effectiveness
subject to certain conditions, such as limiting the amount of allowed and
undisputed unsecured claims other than the Notes to $15 million. The Plan, as
well as PHC's Disclosure Statement, are on file with the Bankruptcy Court and
are available for review and copying during the Bankruptcy Court's normal
business hours.
Paracelsus Healthcare Corporation, a public company listed on the OTC
Bulletin Board, was founded in 1981 and is headquartered in Houston, Texas.
Including a hospital partnership, Paracelsus presently owns the stock of
hospital corporations that own or operate 10 hospitals in seven states with a
total of 1,287 beds. Additional Company information may be accessed through
http://www.prnewswire.com under the Company's name.
Certain statements contained herein are "forward-looking statements"
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve a number of risks and
uncertainties. All statements regarding the Company's expected future financial
position, results of operations, cash flows, liquidity, financing plans,
business strategy, budgets, projected costs and capital expenditures,
competitive position, growth opportunities, plans and objectives of management
for future operations and words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend," "may" and other similar expressions are
forward-looking statements. Such forward-looking statements are inherently
uncertain, and stockholders must recognize that actual results may differ
materially from the Company's expectations as a result of a variety of factors,
including, without limitation, those discussed below.
Factors which may cause the Company's actual results in future periods
to differ materially from forecast results include, but are not limited to: i)
Competition and general economic, demographic and business conditions, both
nationally and in the regions in which the Company operates; ii) Existing
government regulations and changes in legislative proposals for healthcare
reform, including changes in Medicare and Medicaid reimbursement levels; iii)
The ability to enter into managed care provider arrangements on acceptable
terms; iv) Liabilities and other claims asserted against the Company; v) The
loss of any significant customer, including but not limited to managed care
contracts; vi) The ability to attract and retain qualified personnel, including
physicians and vii) Uncertainties associated with the outcomes of PHC's
bankruptcy proceedings.
The Company is generally not required to, and does not undertake to,
update or revise its forward-looking statements.
