Chesley led a Ropes & Gray team that saved the Daughters of Charity Health System from the abyss.
Cash-strapped and facing crises on numerous fronts, the faith-based hospital and health service group faced closure unless it found a financial backer or outright buyer.
"It would have meant a serious loss of health care capacity for both the Los Angeles area and the Bay Area," Chesley said. "This is a system that was very mission-driven to serve the poor."
Masterminding a proposed $250 million deal between his client and New York-based investment firm BlueMountain Capital Management LLC, Chesley knew state Attorney General Kamala Harris had to sign off on the transaction.
A previous potential buyer, Prime Healthcare Services Inc., backed out of an $843 million proposal to acquire Daughters of Charity Health System after finding the attorney general's terms too onerous.
"The process of dealing with the AG is not one of private, arm's length negotiation," Chesley said. "It was difficult to know what the final result would be. We got the final result at the same time as the public did."
In December, Harris approved of the BlueMountain proposal with some caveats. The deal meant the Daughters of Charity Health System hospitals, foundation and subsidiaries became part of a new, non-religious, not-for-profit California health group known as Verity Health System.
Under the terms of the deal, BlueMountain would provide Verity $100 million and a credit line of $150 million. Verity is now run by an independent board of directors along with a new management group spearheaded by BlueMountain.
"Transactional work — it's contentious at times, but it's ultimately collaborative," Chesley said. "I enjoy the teamwork. I really like the major social good aspect of working with health care organizations. It's never dull."
— Kevin Lee
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