A Deal was struck by Cerberus Capital Management to acquire Caritas Christi Health Care, which is a large Massachusetts hospital chain. About $400 million will be injected by the New York-based buyout firm into the hospital chain and about $430 million in debt and pension liabilities will be assumed.

If the deal is approved, Caritas will morph into a for-profit corporation. It is the second-largest hospital chain in New England with six Catholic hospitals in Massachusetts.

Though, the deal faces some hindrances, like getting approved by state courts, government regulators and the archbishop of Boston.

The transaction will be closely reviewed by a local union which represents 3,000 of the 13,000 Caritas employees.

A Caritas Spokesman revealed that the approval process will take about four to five months. Cerberus agreed to keeping current management in place and assured that it will not exit from its investment for at least three years.

Robert Fraiman, Chief Executive of Cain Brothers, a New York investment bank, who advised Caritas in the deal, revealed that the hospital chain was of the view that raising capital through traditional methods was not as attractive as other alternatives.
He said, “Financing the hospital’s growth with debt was not cost-effective given the state of the credit markets”.