HUNTSVILLE — With the expiration date of Scott County’s contract with S.M. Promen LLC at hand, there was earlier this week still no sign that Promen had shored up enough investments to procure a vote of approval from the state attorney general’s office.
Today (Thursday) is the expiration date on the asset purchase agreement entered into by the county and Promen in October 2012. Should today come and go without Promen procuring the $3 million in investments needed to complete the transaction and gain approval from the state attorney general, Scott County Commission will have a decision to make on Monday, when the county legislative body is scheduled to meet in a special session.
While Promen CEO Irving Sawyers Jr. remained in contact with the Scott County Mayor’s office this week and reportedly continued to express optimism that funding would be obtained, there appeared to be no firm movement on Promen’s end as of Tuesday morning, less than 48 hours before the arrival of the expiration date.
Last week, Sawyers approached County Commission to request a two-year provision that would essentially require the hospital to be operated for 24 months to be removed. Commissioners rejected the proposal.
Sawyers said that each of the 14 potential investors he had approached had concerns about the provision, which was reduced from 12 years to two years as part of a compromise before the asset purchase agreement was finalized.
After Tuesday’s meeting, Sawyers told reporters that the request for the clause to be removed was a “shot worth taking,” adding that he still believed funding could be obtained from investors.
Scott County was advised by its attorney, Ernie Hyne of the Nashville law firm H3GM, to reject Promen’s request, saying that doing so would leave the county without protection should Promen’s efforts to build profitability at the hospital fail.
“I believe there is a great deal of risk involved to this county if they waive this provision,” Hyne said.
Hyne opined that removing the two-year clause would enable Promen to quickly leverage the facility as collateral for operating loans, possibly as within 90 days. In such a scenario, the building could potentially be foreclosed on by the lending institution within a matter of months if Promen’s efforts at the hospital failed.
Sawyers rejected that opinion, saying it would take well over two years for lenders to be willing to accept the building as collateral.
Instead, Sawyers said, the request for the two-year clause to be removed was to provide a comfort level for potential investors that they might be able to recoup some of their investment should the hospital fail.
In response, County Mayor Jeff Tibbals asked, “So you’re saying you want to take our security blanket and give it to (your investors),” to which Sawyers responded, “That’s it.”
Monday’s meeting is slated to begin at 5 p.m., ahead of the commission’s regular monthly committee sessions.