Private hospital group in debt restructuring talks
Mount Carmel Medical dependent on banks, accounts state
Published 25/08/2010 | 05:00
One of the largest private hospital groups in the country is facing a major financial battle after defaulting on its bank debt, triggering talks on a restructuring and refinancing of the group.
Mount Carmel Medical Group -- owner of Mount Carmel in Dublin, Aut Even in Kilkenny and St Joseph's in Sligo -- has debts with AIB and KBC and defaulted on a portion of its €84m in bank loans.
The life insurance policy (known as keyman insurance) of the chief shareholder in the company, Gerald Conlan, is among the items that have been assigned to the banks.
"The group has defaulted on certain bank facilities subsequent to year end. The group is dependent on its banks to continue to provide loan and working capital facilities,'' state the accounts of the group, signed off on August 18.
The company made a loss of €48.6m during the year ended December 2008 and it is now preparing its 2009 accounts. The main driver of the large losses was property and goodwill writedowns of €40m.
On the plus side, the company continues to boost its turnover from €55m to €63m.
The deficit in the shareholder's funds of the company is coming to €65.5m, the accounts state, a huge rise on the previous year.
The company has bank facilities which have "expired'', state the accounts. "The group has been unable to meet capital repayments on part of its bank debt that fell due from December 31, 2009, and a result these bank facilities have expired''.
Directors are now in discussions with the banks "in order to refinance the group debt and restructure the group''.
The company warned that it would be a difficult set of discussions.
"There can be no certainty that these discussions with the bank will be successfully completed on a commercially acceptable basis or at all."
The company has instituted radical changes to boost its cashflow and preserve working capital. In relation to the directors, the accounts state: "They remain confident that a restructuring will be achieved,'' but they admit circumstances are not entirely within their control.
The group continues to pursue a contract from the State to build a private co-located hospital, the accounts state and €917,803 was spent on this project during the year under review.
Other cost-reduction measures have been taken to stabilise the business, including outsourcing catering in the Dublin hospital.
This cost in the short term is €395,923, but is likely to lead to cost benefits in the longer term. The company also paid out €1.7m in relation to a planning application at Mount Carmel.