West Penn Allegheny Health System in Pittsburgh has $737 million in outstanding debt obligations, and the financially flailing health system's investors are urging for more transparency, according to a Pittsburgh Post-Gazette report.
Investors are asking for better disclosure of West Penn's financial activity since the health system's debt it so steep, and the tipping point has been the recent battle between West Penn and health insurer Highmark. In September, West Penn called off its merger with Highmark, arguing the health insurer breached the affiliation agreement with plans to restructure West Penn through bankruptcy.
Highmark officials notified West Penn executives Aug. 30 of their desire for the health system to file for bankruptcy, but West Penn's bondholders did not know about this development until West Penn canceled the merger Sept. 28.
Investors are attracted to municipal bonds because of their tax exemptions. However, muni bond issuers do not have to disclose the same extent of information as required of corporate entities, which must do so through the Securities and Exchange Commission. This difference has irked bondholders like those at West Penn. In August, the SEC actually issued a 150-page report on how to improve the $3.7 trillion municipal securities market, and more disclosure and audited financial statements were centerpieces of the SEC's recommendations.
"When you lend an issuer a large amount of money, you would like to know what's going on," said Michael Griffin, municipal credit director for investment firm Vanguard. "You want some heads up on what's happening and what they're doing about it."
Investors are asking for better disclosure of West Penn's financial activity since the health system's debt it so steep, and the tipping point has been the recent battle between West Penn and health insurer Highmark. In September, West Penn called off its merger with Highmark, arguing the health insurer breached the affiliation agreement with plans to restructure West Penn through bankruptcy.
Highmark officials notified West Penn executives Aug. 30 of their desire for the health system to file for bankruptcy, but West Penn's bondholders did not know about this development until West Penn canceled the merger Sept. 28.
Investors are attracted to municipal bonds because of their tax exemptions. However, muni bond issuers do not have to disclose the same extent of information as required of corporate entities, which must do so through the Securities and Exchange Commission. This difference has irked bondholders like those at West Penn. In August, the SEC actually issued a 150-page report on how to improve the $3.7 trillion municipal securities market, and more disclosure and audited financial statements were centerpieces of the SEC's recommendations.
"When you lend an issuer a large amount of money, you would like to know what's going on," said Michael Griffin, municipal credit director for investment firm Vanguard. "You want some heads up on what's happening and what they're doing about it."
More Articles on West Penn Allegheny Health System:
In Countersuit, West Penn Says Highmark is Holding it "Hostage"
Several West Penn Physicians Dissatisfied With Highmark Split
West Penn Faces Moody's Downgrade After Nixing Highmark Merger