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Grupo Hima San Pablo, Inc.

Second Largest Hospital Chain In Puerto Rico

Founded in 1988, Grupo HIMA-San Pablo, Inc. operates hospitals and medical centers in Puerto Rico. It offers cancer, robotic and robotic radio-surgery, stroke, infusion, cardiovascular, maternal fetal medicine, fertility, radiology imaging, pediatric and adolescent, specialty, adult specialty, integrated pediatric, radiation imaging, neonatal intensive unit facilities, cardiology, neuro-rehabilitation and physical therapy, emergency, and ambulatory services. 

Corporate Highlights

8/28/2017: Article discusses financial strain in Puerto Rico hospital system

In the San Pablo HIMA Hospital system, 750 employees have been dismissed since 2015, they have frozen and eliminated places, reorganized departments and automated services. Armando Rodríguez, executive vice president of HIMA, said that the $ 34 million that Molina Healthcare owes them is one of their biggest problems. "Practicing medicine with your hands tied behind your back is very difficult," he said, stressing that this situation affects the service patients receive due to the flight of doctors and other health professionals, mainly due to problems with payments. of insurers.

3/3/2017: Company undertakes staff cut-backs due to unpaid receivables.

BDC Credit Reporter View

There are 4 BDCs with exposure to this troubled Puerto Rico hospital chain dating back to 2013, which was already experiencing financial difficulties before Hurricane Maria devastated the island in August 2017. We have been steadily marking down the credit from CCR 3 to CRR 5 or Non Performing. However, only the second lien debt is not current. The first lien debt (60% of BDC exposure at cost) continues to be paid. However, both the first lien and second lien have or will come due shortly and it's unclear if there's yet any path to repayment. All the BDCs involved have been close lipped on the subject, so this could still go either way. The hospital depends heavily on federal and state and private insurance reimbursement programs for its income, which could be affected by political and fiscal considerations. Also the Company operates in an island with major financial problems and net population migration. The first lien debt, which generates $2.2mn of annual interest income, could still default and substantial losses recorded even beyond the marks at 9/30/2018. The biggesat exposure is that of WhiteHorse Finance (WHF) but principally in the first lien. The biggest second lien exposure is KCAP Financial's (KCAP). This credit requires regular monitoring. 

Highlights

IVQ 2017: Second lien debt owned by 3 BDCs placed on non-accrual. Rating changed to CCR 5. First lien remains performing.

IIQ 2017: Rating dropped to CCR 4 - Worry List - due to further substantial cut in valuation, especially in second lien debt.

IIQ 2016: First placed on Watch List with CCR 3 rating due to valuation write-down of both debt tranches by multiple BDCs.

IQ 2013: Lenders - including several BDCs - provide $262mn financing package for Company.

"The 262 million syndicated credit facility, includes a First Lien Facility that consisted of a $15 million revolver, a $50 million Term Loan A, and a $113 Million Term Loan B; and a Second Lien Facility that consisted of an $84 million term loan".