Japan’s Sumitomo seeking to offload troubled Healthscope loans

Healthscope is struggling with high costs and breached its loan agreement terms this month.

Japan’s Sumitomo Mitusi Banking Corp is one of eight lenders to Healthscope poised to offload its loans to the cash-strapped hospital business, sources say.

It comes after financiers with loans worth $350m, amounting to 28 per cent of the overall debt of $1.4bn, refused to agree to allow Healthscope interest payment relief until May.

The relief was sought by Healthscope as it struggles with high costs and after it breached its loan agreement terms this month.

The majority of the 25-odd lenders, including Australia’s top four banks, allowed for the relief or forbearance agreement as owner Brookfield launches a sale of the business through Moelis and calls for bids by the end of May.

The eight banks that did not include those from Asia and Europe, including Japan, Singapore and China.

As earlier reported, US-based funds are lining up to buy the loans, creating strong competition. HMC Capital is keen to buy Healthscope to ensure the company’s survival and to protect its own listed group that is a landlord, to Healthscope, HealthCo.

The understanding is that HMC is a buyer of the debt at between 20c and 40c in the dollar.

Bain Capital is also expected to be among the interested buyers.

Brookfield purchased Healthscope for $4.4bn in 2019 and sold its properties for about $2bn to fund the transaction. But it has been hit by high costs.

Elsewhere, the New Zealand Infrastructure Investment Summit that launched on Wednesday attracted Australian superannuation funds and institutional investors including the Australian Retirement Trust, Aware Super, Morrison and Igneo.

They joined Brookfield and other Canadian pension funds and lenders like Westpac, Citi, Macquarie and RBC.

Also in attendance were listed companies such as infrastructure investor Dexus and engineering firm Downer and Fletcher Building, along with toll road operator Transurban. The summit is being held to showcase New Zealand’s infrastructure pipeline.