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BOND INSURER URGES NRMC BOARD TO ACCEPT ITS RECOMMENDATION

Wednesday, January 24, 2024
Tammy Helm, Editor

On Monday, the Nevada Regional Medical Center Board of Directors received a
letter encouraging the board to reconsider accepting Build America Mutual
Assurance Company's (BAM) recommended chief restructuring officer.

The CRO selected by BAM would help the hospital resolve its financial troubles,
which includes a declaration of default for the revenue bonds issued by the city
for the hospital.

The letter also addresses consequences the hospital may face if the board does
not reconsider its decision.

BAM, the insurer for the bond issued by the city of Nevada for NRMC, states BAM
"continues to welcome and encourage ongoing discussions about potential terms of
forbearance and withholding of the exercise of remedies with respect to the
defaults specified in the default declaration. BAM, as the insurer of the bonds,
is the party entitled to direct the trustee (UMB Bank, N.A.) to exercise any and
all available remedies or to forbear from exercising remedies."

According to the letter from Michael Weinstein, BAM chief surveillance officer,
the NRMC board is not interested in considering BAM's recommended restructuring
officer and the board chairman "is no longer willing to engage in direct
communications with BAM and future communications regarding the hospital should
be conducted through the board's new outside counsel."

On Tuesday, NRMC Board Chair Bob Beaver told the Daily Mail he is not saying he
won't speak to Weinstein, but for information regarding the hospital, Weinstein
will have to speak to a recently retained attorney, Daniel Doyle of Lashly &
Baer, P.C. of St. Louis.

Weinstein also states in his letter BAM "will seek judicial appointment of a
receiver if the hospital will not agree to the consensual engagement of a
qualified chief restructuring officer/consultant with proper delegated powers to
position the hospital for sustainable operations." Weinstein also states the CRO
candidate "is prepared to start immediately. In fact, this individual has
developed a plan, based on NRMC's public financial disclosure, to realize
immediate improvement in several areas that he was ready to present to the NRMC
Board on Jan. 23."

Beaver said the board has not dismissed the idea of adding a chief restructuring
officer.

"There's a whole bunch out there," Beaver said of potential CROs. "They (bond
insurers, bond attorneys and others) all have their favorites. If we're hiring
an attorney, we should at leas talk to him and see which restructuring person he
has worked with, if he has someone he would recommend. It seems logical."

Beaver said a special meeting may be held in the near future to meet with a
potential CRO. He said the date and time of the meeting will depend on the
individual's availability. Beaver said there is a chance the meeting will be
closed as a CRO could become an NRMC employee. Revised Statutes of Missouri
allows for closed meetings to discuss the hiring of employees.

Weinstein states "this reversal by the hospital board has compelled BAM to
direct the trustee to send the default declaration and to consider remedies
available to it," but BAM is willing to continue discussing "terms that are
mutually agreeable to BAM and NRMC" and is willing to advance funds to pay the
first few month's salary of the CRO.

Weinstein also discusse

ds NRMC's low daily cash balance, which are in the black because NRMC has not
been paying its creditors on a timely basis. Accounts payable are operating on
109.1 days instead of 60, according to Weinstein.

He also states NRMC has received managerial assistance from two outside
consulting firms and has made changes on some recommendations, but those have
not been enough. Weinstein said the board "has been unwilling to consider
certain recommendations, such as RHG's proposal to replace the current facility
with a smaller, better designed hospital, financed through a low-cost USDA loan
program, that would be aligned with the community's needs and wold allow NRMC to
operate on a sustainable long-term basis. By dismissing such recommendations
without property analysis or due diligence, the board has demonstrated that is
(sic) does not have the willingness to take the steps necessary to ensure the
long-term viability of NRMC."

Weinstein also states a CRO is "the most productive and effective approach to
resolve NRMC's financial circumstances."

Closing the hospital "would have a devastating impact on the Nevada community,"
Weinstein stated.

He also said filing for bankruptcy is also not a good option as that would also
impact the city, as owner, issued the bonds for NRMC.

Bankruptcy, according to Weinstein, "would invariably land the city itself in
bankruptcy also, and lead to a downgrade of the city's financial rating and its
ability to finance its own capital improvements and needs. In addition, such
filing would spark a vigorous legal challenge by the BAM and other NRMC and city
creditors – ultimately consuming public resources that are better directed to
improving NRMC's operations."

Nevada City Manager Mark Mitchell, who received a copy of the BAM letter, told
the Daily Mail the city is consulting with City Attorney William McCaffree and
William Burns, esquire, Gilmore & Bell, PC, bond counsel for the city, to
confirm Weinstein's statement. Mitchell said he intends to present that
information to the city council on Feb. 6 and also, if possible, make that
information public.

Beaver said he could not confirm or deny the board has discussed the possibility
of filing for bankruptcy. He said that would be a closed session discussion,
which is not to be made public.

According to a biography for Doyle on the Lashly & Baer website, Doyle "has
significant experience in both bankruptcy and transportation cases, having
represented transportation companies both as creditors and as debtors in large
Chapter 11 cases. Most recently, Mr. Doyle filed a Chapter 9 bankruptcy case for
a critical access rural hospital that culminated in confirmation of a plan
supported by a number of governmental creditors, preserving desperately needed
health care to an underserved region. Both Chapter 9 municipal filings and
successful hospital reorganizations are rare."

Weinstein's letter also states "certain of the defaults enumerated in the
Default Declaration cannot be cured." The letter does not state what those are,
but those "give rise to BAM's right to direct the trustee to pursue available
remedies. Those remedies range from all gross hospital revenues being placed in
a lock box controlled by the trustee or its designee; appointment of a receiver;
entry into, use, occupation and control of the mortgaged property; foreclosure
of the lien and sale of all real property; acceleration of the bond maturity
date; and "all other legally available rights and remedies."

The letter concludes with Weinstein stating he believes the hospital leaders
need assistance in resolving the financial problem and he hopes the board will
"continue to engage with BAM on ways we can work collaboratively to ensure the
hospital's long-term success."

The Daily Mail's attempt to obtain more information from BAM was unsuccessful by
press time.

"The hospital will not close," Mitchell told the Daily Mail, adding while he
remains as the city manager, he is doing everything possible to make sure the
issue is resolved.

Mitchell said it is also in BAM's best interest to ensure the hospital continues
to operate. He said like any other insurance company that doesn't like to pay a
claim, BAM is doing everything possible to avoid having to pay off the bond.

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