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Bank calls in CMHS loan

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Hospital has one year to repay $5.7M

By Mike Wright

SunTrust Bank has informed Citrus Memorial Health System it has one year to pay the remaining $5.7 million owed on a 2006 bond.

The notice comes four weeks after CMHS took a bond-rating hit for the second straight year from Moody’s Investors Services.

Bill Grant, attorney for the Citrus County Hospital Board, or CCHB, said the hospital is also being pressured by Compass Bank to pay the remaining $8 million on a 2008 bond. CMHS spokeswoman Katie Mehl said that isn’t the case.

Mehl said the SunTrust action is a result of ongoing financial disputes between the Citrus Memorial Health Foundation— which leases the hospital from the hospital board and oversees operations — and CCHB.

“The Citrus County Hospital Board promised to provide funding and that’s part of the reason why we’re being downgraded,” she said. “With the help of the CCHB, we should be able to pay those bonds back with no problem.”

The SunTrust notice, sent to Citrus Memorial CEO Ryan Beaty and hospital board Chairwoman Debbie Ressler, demands the hospital to pay the amount owed from a $10 million bond. It gives the hospital until April 2, 2014, to pay the bond, which was scheduled to mature in 2016.

Moody’s downgraded CMHS from Ba2 to Ba3. It said the hospital’s  financial outlook is negative.

The Moody report cited “poor operating performance” of the hospital along with the ongoing legal dispute with the CCHB, which has raged since 2009.

Both boards at times have seemed close to resolving financial issues, but they remain unresolved. The CCHB offered to pay the hospital $3 million in exchange for holding trustees harmless against further legal action, as part of a settlement in several pending lawsuits. The hospital’s foundation board will meet Thursday in private with its attorneys to determine whether to accept the settlement or make a counteroffer.

Grant noted the CCHB teamed with the foundation to pay $3 million toward the SunTrust bond in October.

Both the foundation and CCHB are obligated to the bond.

A sale or lease of the hospital would render the bond matter moot because proceeds from a transaction would pay off remaining debt. Or, SunTrust could rescind its action and allow the bonds to be paid by 2016, Mehl said.

Grant said the answer lies with the foundation accepting the CCHB’s latest offer.

“Where are we going to go next? More meetings?” he said. “I don’t know what’s going to happen.”

Contact Chronicle reporter Mike Wright at 352-563-3228 or mwright@chronicleonline.com.