Daughters of Charity Health System has closed its transaction with BlueMountain Capital Management/Integrity Healthcare to create Verity Health System, saving six financially troubled health facilities. Ropes & Gray advised DCHS on the transaction, which was announced July 17, approved by California Attorney General Kamala Harris on Dec. 3, and closed on Dec. 14. The attorney general’s office described the deal as “the largest and most complex nonprofit hospital transaction in California history.”
Effective immediately, the health system continues under the leadership of a new, independent board of directors. Integrity Healthcare, an affiliate of BlueMountain, provides executive management services. In an innovative structure, BlueMountain has infused new capital in exchange for purchase options and facilitated novel tax-exempt debt for refinancing, capital and operating needs. Verity has pledged to preserve the health facilities’ mission of charity care, honor existing labor agreements, and preserve the pensions of over 17,000 current and former employees.
The Ropes & Gray team was led by tax partner Kendi Ozmon (Boston); finance partner Alyson Allen (Boston); and private equity partner Howard Glazer (San Francisco).
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