Ann: Healthscope Update, page-59

Strategic games are being played out now.

Notice: Partial rent was paid, and it was for MARCH. So Healthscope is NOT behind in the rent, they have just not paid the full month rent in ADVANCE.

The lease contract, if on standard commercial terms, will state that rent needs to be paid in advance by x date.
But failure to pay that rent in advance will not be grounds for termination of the lease (no judge will uphold eviction on commercial tenancy law), just because rent was not paid in advance).

So partial payment was made, and so long as the rest of March rent is paid in March, HCW and HMC can jump up and down to their hearts content, but the 'breach' will not be severe enough to enable the cancellation of the lease (and thereby appoint the properties to another party). HCW would have the pants sued off them if they tried by Healthscope.


So the intital warning cannons are going off.

HCW and HMC are making it quite clear, that they will not accept anything less than full rent. If Healthscope does NOT pay the full rent, in accordance with the lease contract, they have no issue with 'kicking the tenants out'.

Healthscope also has an interest payment to debt holders on the 13th March. Given cash flow issues, they might well be delaying payment to the landlord (ie HCW) to make the interest payment. A failure to make an interest payment on debt on the day due is more severe than delaying payment to the landlord. If they delay payment on the date of due interest payment, their debt goes into 'default' or words to that effect. I am not expert on this part.
This will have very serious consequences for Healthscope.

So I guess the first hurdle will be March 13, let's see if they make interest payment to Healthscope debt holders.

The next hurdle will be end of March... does Healthscope make the balance of the March payment.

There are going to be lot's of nervous nellies, and probably lack of share buyer support with so much uncertainty.

So share price could well drop more...

But remember.... underneath everthing... these are commercial properties. HCW is not a 'business', its an owner of commercial properties.

Exciting times, and I am watching closely.

Quite happy