Fitch Ratings lowered its already low rating for West Penn Allegheny Health System to CCC from B+, a multi-notch drop, as the chance of debt restricting grows and an acquisition by Highmark looks less certain.
The news came as the financially strapped health system and Highmark, a Pittsburgh insurer, went before a Pennsylvania judge for a hearing on West Penn Allegheny's recent bid to back out of its acquisition by Highmark in order to search for another buyer. The system announced the deal was off in late September and Highmark quickly sued to stop West Penn Allegheny from talking to new suitors.
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New court records in the disputed breakup of West Penn Allegheny Health System and Highmark suggest that the system's continued financial distress left the insurer with a nagging sense of buyer's remorse.
Highmark, which last year agreed to acquire West Penn Allegheny for $400 million in grants and loans and another $75 million commitment to medical education, presented the health system in August with analysis “suggesting that Highmark is overpaying for West Penn Allegheny,” according to the health system's latest court filings.
The pair ended up in court this month after Highmark sued to stop West Penn Allegheny from looking for a new buyer. West Penn Allegheny said in late September it would seek a new buyer after Highmark demanded new terms and insisted the system restructure its debt in bankruptcy.
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