THE BEACON group, the Irish private hospital business currently awaiting finalisation of a €68 million US investment, made a loss of €8.8 million in the period to the end of August 2007, according to accounts just filed.
The notes to the accounts, which are dated May 29th, 2009, say the group made further losses subsequent to August 2007 and has been given additional working capital by its shareholders.
The shareholders of the Beacon Medical Group Ltd during the 2007 year were Michael Cullen, Patrick Shovlin and Prof Mark Redmond. John Delaney has subsequently acquired a shareholding.
The accounts show that, at the end of August 2007, Mr Cullen and Prof Redmond were each owed €1.83 million by the company.
The May 2009 notes to the accounts say the directors were seeking to raise additional equity while trying to renegotiate the payment terms of existing debt. Ulster Bank has a number of mortgages registered against the company.
Credit facilities, which in aggregate total €130 million, contain certain convenant tests in respect of the performance of a group subsidiary, Beacon Hospital Sandyford Ltd, according to the accounts. The company was in breach of these convenants but the bankers have been supportive during the period, according to the accounts.
A spokeswoman for the group said 400 Irish tax investors were written to last week by Goodbody Stockbrokers to get their approval for the equity investment by US-based University of Pittsburgh Medical Centre (UPMC). The deal was expected to be closed in another three weeks, she said, and no difficulties were envisaged.
The failure of the business would mean tax advantages that have accrued to the investors could be clawed back by the Revenue. The investment by UPMC will effectively give it two-thirds ownership of the Beacon Hospital in Sandyford and a 40 per cent shareholding in three “co-located” private hospitals planned for Dublin, Cork and Limerick.
UPMC has annual turnover of $7 billion, according to a company spokesman, who said the deal with Beacon will secure the Sandyford hospital’s future.
The accounts for Beacon Medical Group show that, in December 2006, it sold the Beacon Hospital for €167 million. This is a reference to the sale of the hospital to the tax investors, who invested €42.7 million, according to a spokeswoman for Beacon. The remainder of the €167 million came from the banks and from the three “promoters” of the business being Mr Cullen, Mr Shovlin and Prof Redmond. The 400 tax investors accrue the entire €167 million tax advantage, she said.
The accounts show the company entered into an agreement in December 2006 to buy the hospital back for €124.3 million in 2016. The deal allows the investors have ownership of the hospital for the duration of the tax advantages that will accrue. They will suffer no financial disadvantage as a result of the investment by UPMC.
An Bord Pleanála earlier this week granted permission for the construction of the hospital in Cork on the grounds of the Cork University Hospital. At the time, Mr Cullen expressed confidence the group would be able to secure the €800 million in funding required for the development of the three private hospitals. He said the group would have to seek funding from a greater number of banks than would have earlier been envisaged.
