OKLAHOMA CITY, Oct. 27, 2016 /PRNewswire/ -- Foundation HealthCare, Inc. (OTCQB: FDNH), which is an owner and operator of surgical hospitals, announced today the Company has sold the non-controlling interests it owned in seven ambulatory surgery centers ("ASCs") and substantially all the assets of Foundation Surgery Management, LLC ("FSM") to Healthcrest Surgical Partners, LLC ("Healthcrest"). The principals of Healthcrest were the management of the Company's ASC division prior to the transaction.
At closing, Foundation received $2.5 million in cash and a subordinated promissory note for $2.75 million. The note provides that Foundation will receive interest at a rate of prime plus 2.5% per year, with a floor of 6%, payable monthly. The first year will be interest only beginning November 1, 2016 then beginning on November 1, 2017, Healthcrest will make monthly principal and interest payments based on a seven year amortization with a final payment of all principal and interest on October 1, 2019. The promissory note is secured by personal guarantees from the principals of Healthcrest, but Foundation's security interest and its right to be repaid on the note is subordinated in all respects to the senior lenders of Healthcrest.
Foundation will use the $2.5 million from the proceeds from the transaction to pay down it's line of credit with its senior lenders. "This sale will allow Foundation to focus all its resources and energy on our primary business which is the management of our majority-owned surgical hospitals," said Stanton Nelson, Foundation's CEO.
In addition, Stanton Nelson, CEO announced today that he is converting his salary to stock in order to preserve cash. "For the foreseeable future, I have made the decision to convert my salary to stock as a way to preserve cash but also allows me to re-invest in a company I really believe in," stated Nelson.
About Foundation HealthCare – Headquartered in Oklahoma City, Foundation HealthCare owns and operates three surgical hospitals. Physicians who operate in our facilities currently provide general surgeries and surgeries in such specialties as orthopedics, neurosurgery, pain management, podiatry, gynecology, optometry, gastroenterology and pediatric ENT (tubes/adenoids).
Foundation HealthCare's management seeks to operate each facility efficiently and effectively such that patients receive high quality, cost effective care. The Foundation team seeks to improve the performance of each hospital by recruiting physicians to operate in its facilities and incorporating additional ancillary services in their markets. These additional service lines, such as toxicology, wound care, sleep management, radiology and imaging, truly make the Foundation specialty hospital environment unique.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on the Company's current expectations, forecasts and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the Company's expectations, forecasts and assumptions. These risks and uncertainties include risks and uncertainties not in the control of the Company, including, without limitation, the risk that Company will maintain enough liquidity to execute its business plan, continue as a going concern and other risks including those enumerated and described in the Company's filings with the Securities and Exchange Commission, which filings are available on the SEC's website at www.sec.gov. Unless otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Company Contact:
Foundation HealthCare, Inc.
Stanton Nelson, CEO
Primary contact: Brooks O'Neil, 952-239-7677 (firstname.lastname@example.org)
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SOURCE Foundation HealthCare