HMC Capital taps Macquarie Capital for Healthscope play

Healthscope is the nation’s second-largest hospital operator.

In a further sign that parties are getting serious about a Healthscope takeover attempt, investment bankers are now being signed up, with Macquarie Capital tapped by HMC Capital.

As earlier revealed by DataRoom, HMC Capital’s private ­equity arm, headed by David Di Pilla, is working on a consortium bid for the nation’s second-largest hospital operator.

It is part of a quest to not only protect rents for his listed satellite company HealthCo, which is a major Healthscope landlord, but to provide a sustainable future for a company critical to the nation’s healthcare industry.

Mr Di Pilla is known to have a close relationship with Macquarie through his HMC Capital business.

Other advisers are also thought to be around the hoop for potential players, including advisory firm Luminis Partners, which is said to be in the mix.

Brookfield has had restructuring advisers working on solutions for Healthscope, including Moelis and FTI Consulting with lenders, advised by Houlihan Lokey and McGrath Nicol, expected to offload loans at a discount, potentially to HMC Capital.

Bain Capital is also hovering.

Various parties are believed to be part of the talks, including health insurer Bupa, although it is now understood it is not locked in to a deal at this stage.

Ramsay Health Care is also positioning to take over some of its 38 hospitals.

Another landlord is Northwest Healthcare Properties, which is believed to be willing to participate in a viable solution.

Other groups approached to take on the management of some Healthscope facilities include St John of God Healthcare and St Vincent’s Healthcare.

Not-for-profit healthcare providers have the advantage of being exempt from payroll tax and land tax in hospital ownership.

Aurora Healthcare could buy the mental health rehabilitation clinics.

Brookfield paid $4.4bn to purchase Healthscope in 2019, but it is expected to breach covenants on $1.6bn of debt in March as it struggles with high operating costs.

Any acquisition of Healthscope would involve a complex deal which would take at least six months to execute and require state government approvals.

Sources believe the lenders would probably waive the covenants to create time for Brookfield to arrive at a solution.

Mr Di Pilla’s plan could involve buying debt from Healthscope’s lenders, which sources have suggested would now be worth less than 50c on the dollar.

With HMC Capital as owner, Healthscope’s debt repayment costs would be reduced, placing Healthscope in a better position to pay its rent.

Brookfield is understood to believe there is no equity left in the business and has put restructuring experts in charge.