The Berks County nonprofit Tower Health has secured a major refinancing deal that provides an additional $142.5 million in cash for daily operations. This agreement also postpones bond redemptions through 2029, including those due in February 2027 and February 2029. This move gives Tower Health more time to focus on financial recovery from its major expansion into the Philadelphia region before the COVID-19 pandemic hit.
The support from the majority of bondholders for this agreement is seen as a strong endorsement of Tower Health’s financial recovery plan. In the nine-month period that ended on March 31, Tower Health reported a $27.4 million operating loss, an improvement from a $122.8 million loss in the same period the previous year. However, the reduction in losses did not result in an increase in Tower’s cash reserves, which decreased to 30 days of operating expenses on March 31, down from 32 days at the end of the year.
The $142.5 million obtained through additional debt will nearly double Tower’s cash reserves, which were at $153 million on March 31. When Standard & Poor’s downgraded Tower’s credit rating to CCC last month, concerns were raised about Tower’s ability to pay for the February bond redemption. The nonprofit’s financial struggles stemmed from costly acquisitions, including five struggling community hospitals, which expanded Tower Health into the competitive Philadelphia market. Three of the five hospitals have since been closed or sold, leaving Tower Health with Reading Hospital as its anchor, along with Phoenixville and Pottstown Hospitals
