HUNTSVILLE — Meeting in a special called session at the Scott County Office Building here Monday, the Scott County Commission voted to give S.M. Promen, LLC of Tennessee until month’s end to bank the funds necessary to reopen the Scott County Hospital.
In exchange, Promen CEO Irving Sawyers, Jr. volunteered to write a check “tonight” for $20,000 to cover the county’s estimated hospital-related expenses for the month of February.
That’s how the hour and 20-minute meeting between the commission and Sawyers concluded Monday evening, but does little to illustrate the tense discussion that preceded it.
The Asset Purchase Agreement between the county and Promen actually expired January 31, and the special meeting was called to allow Sawyers the opportunity to state that the funding was in place, or to terminate the contract and begin the search for a new health care provider to reopen the hospital.
Sawyers entered Monday evening’s meeting just before it was to be called to order and presented County Mayor Jeff Tibbals and County Attorney John Beaty a “Letter of Commitment” to him from Donald E. Downey of Cookeville, pledging a total of $2 million in funding on Promen’s project to reopen the hospital.
Downey’s letter pledged to acquire 80 shares ($2 million worth) of stock, beginning with signing a subscription document for 80 units at $25,000 each. The letter also revealed that Downey had banked $400,000, pledged an additional $200,000 to be deposited by February 8, and that he would “secure, by a combination of sale of investments or obtaining loans” for the balance of $1.4 million by February 28.
Ironically, Downey had earlier expressed interest in raising the capital for the project on his own, but withdrew his offer when he was unable to do so prior to the county’s deadline for choosing a new provider.
Sawyers, meanwhile, has been working with another group of investors, who apparently backed out due to the county’s insistence that a covenant containing a two-year reversion clause be included in the Asset Purchase Agreement.
Once copies of the letter were made for the commissioners and the meeting called to order, Mayor Tibbals explained that instead of the $3 million Sawyers had pledged for reopening the hospital, it had been reduced to $2 million, and that the letter of commitment he had been promised by 10 a.m. that morning had just now been handed to him.
Mayor Tibbals stated that the commission could either terminate the contract with Promen, or make a decision to set a definite deadline for the proof of capital funding for the project.
Beaty followed by saying “You need to make a decision tonight.”
Those statements launched a round-table discussion which eventually led to a motion by Ron Blevins, second by Dennis Sexton and a 14-0 vote to give Promen 24 more days to raise the needed capital to reopen the hospital.
Sawyers was bombarded with a series of questions and statements from commissioners concerning what assurances he could give them concerning his commitment to meet the February 28th deadline.
And, despite his willingness to provide $20,000 up front to cover the county’s expenses in February, a few of the commissioners also tried to solicit further concessions on Sawyers’ part for his failure to meet the original January 31 deadline, such as making the December payment ($26,175) on the Professional Building loan.
On one occasion, a discussion ensued concerning the county’s right to negotiate with other potential firms while Sawyers was working to raise the needed financing for the project.
That discussion came to an abrupt halt, however, when Beaty explained that the contract with Promen would remain in effect until such time as the commission decided to terminate it.
As to the additional $1 million that Sawyers himself said would be needed to launch the reopening of the hospital was concerned, he explained that as soon as the facility was open, he would have in hand a debt equity in the amount of $1 million to fall back on if needed.
As to his commitment to the county, Sawyers stated that he was “passionate about getting it done and getting it done right.”
The key issue that led to the commission’s vote to give Promen more time to raise funds, centered around the fact that once the contract is terminated, the search for a new provider would have to begin again — and would result in more lost time than the February 28 deadline.
If and when Sawyers has his financing in place, he said it would take another 60 to 90 days to reopen the hospital.