The Detroit Medical Center (DMC) Board of Trustees and Nashville, Tenn.’s Vanguard Health Systems Inc. have signed a letter of intent for DMC to become part of the Vanguard system and for Vanguard to invest $850 million in capital improvements to DMC’s eight-hospital system.
According to the organizations, the letter of intent has six major provisions, two of which include:
- Vanguard will acquire all of the DMC System’s assets (other than donor-restricted assets) for a purchase price that includes approximately $417 million to retire all outstanding DMC bonds and other long-term indebtedness and also requires Vanguard to assume all DMC liabilities (other than such bonds and long-term indebtedness).
- Vanguard has agreed to spend $850 million in capital investment in DMC over the next five years, more than $800 million in the City of Detroit.
The letter of intent is non-binding and extends through June 1, 2010, at which time the parties are required to have completed a mutually acceptable binding definitive agreement.