Highmark, West Penn Bondholders Agree to Skirt Bankruptcy

Health insurer Highmark and West Penn Allegheny Health System, both based in Pittsburgh, have tentatively agreed to a deal that would avoid a bankruptcy filing for the financially beleaguered West Penn, according to a Pittsburgh Business Times report.

Highmark and West Penn have been negotiating a merger deal for more than a year, and discussions hit a major snag in September when West Penn called off the $475 million merger. At the time, West Penn officials claimed the insurer breached their affiliation agreement by allegedly wanting to restructure the health system through bankruptcy.

The two parties have since reconvened at the bargaining table. The current agreement would allow West Penn to avert bankruptcy on its debt, which stands at $710 million. However, sources told the Pittsburgh Business Times that final details of the agreement were still being hammered out, and negotiations "could still fall apart." The deal would also have to be approved by the Pennsylvania Insurance Department.

West Penn has been in dire financial straits as of late. In December, Standard & Poor's Ratings Services downgraded the health system's bond rating two notches — from "B-" to "CC" — after it reported a loss of $24.7 million in the most recent quarter.

More Articles on Highmark and West Penn Allegheny Health System:

Insurance Department Wants More Details of Highmark-West Penn Deal
UPMC Says it Won't Return Mistakenly Received West Penn-Highmark Info
SEC Issues Notice to West Penn Regarding 2008 Accounting Error

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