University Health Systems of Eastern Carolina has reduced its offer for a lease-purchase agreement for Beaufort Regional Health Systems from $30 million to $25 million in part because of a recent audit of BRHS’s finances.

UHS also moved forward the deadline for negotiations from April 29 to May 31.

The revised offer was attached to an amended letter of intent between UHS and BRHS presented Tuesday to the BRHS Board of Commissioners.

“Our offer adjustment came in response to new information emerging from Beaufort Regional Health System’s financial audit,” said Roger Robertson, president of East Carolina Health in a statement released by UHS to the Daily News. “Our previous offer was based on unaudited financials provided by Beaufort Regional that overstated the system’s working capital by $5.6 million and did not accurately reflect the reality of Beaufort Regional’s financial situation.

“Our current offer is based on the system’s final audited financials and expresses our commitment to ensuring high-quality care, close to home for Beaufort County residents,” he said.

The amended letter of intent also reduces the $10 million that UHS initially offered for the purchase of the BRHS property at the end of 30 years by “the amount of any Excluded Liabilities paid by UHS on BRHS or its affiliates behalf.”

There are 10 such liabilities listed in the amended letter.

The amended letter and reduced offer were presented to members of the BRHS board’s executive committee during a meeting of the committee with UHS officials, board Chairwoman Alice Mills Sadler told the board as its members were given copies of the letter and revised offer.

After meeting in a closed-door session with their lawyer, BRHS board members voted unanimously to authorize Sadler and BRHS lawyer Joe Kahn to sign the letter after discussing two changes with UHS officials.

BRHS will ask UHS for an additional $500,000 to cover any unanticipated payments due by BRHS that result from contracts currently in force with the local health-care system.

BRHS also will ask UHS to share with BRHS any accounts receivables č or payments due BRHS č that are recovered in addition to those identified in the audit of the health system’s 2009-2010 financial statements.

In an interview after the meeting, Sadler said she was surprised by the UHS decision to revise its offer.

“We weren’t expecting a revised letter of intent,” she said. “I am hopeful that they will accept our revisions.”

Sadler said the revised UHS offer will still allow BRHS to transfer debt-free the management of the health system to the Greenville-based health-care provider and leave a trust fund of between $2 million and $3 million for health-care needs for the community.

Meanwhile, Beaufort County Manager Paul Spruill told the Washington Daily News the revised offer should not significantly delay action by the Beaufort County Board of Commissioners on the proposed lease-purchase agreement.

Spruill said he anticipates no change in the ability of the financially strapped local health-care system to provide services to the community.

The delay is “not significant enough to worry me about the ability of the hospital to operate until the transaction is complete,” he said.

In January, the BRHS board voted to accept the lease-purchase offer from UHS, but the ultimate decision to accept or reject the offer lies with the Beaufort County commissioners.

While the BRHS board and UHS negotiate the terms of the management agreement, the county is working with UHS to identify those pieces of property that will be covered by the lease.

Those negotiations are about 95 percent complete, County Commissioner Hood Richardson told the Daily News. Richardson also serves on the BRHS board.

Sadler, on behalf of the BRHS board, first signed a letter of intent with UHS in early February, allowing UHS to move forward with its inspection of the financial records and operations at BRHS – a process known as “due diligence” – in advance of signing a 30-year lease agreement for management of the local health-care system with the Beaufort County commissioners. The 11-page letter and attached summary of transaction terms also was signed by Dave C. McRae, chief executive officer of UHS.

Since that letter was signed, UHS has paid $300,000 in “lock-up” fees to BRHS and will make an additional $100,000 payment to BRHS when the revised letter of intent is signed, according to terms listed in the document.

Kahn told the board that UHS is “about three-fourths of the way through the due diligence, but the final quarter that we have to go through is usually the most difficult,” adding, “We’re making progress.”

Kahn told the BRHS board Tuesday that results of the 2009-2010 audit prompted UHS to revise its offer.

The audit, presented to the BRHS board earlier this month, uncovered two “material weaknesses,” two “significant deficiencies” and three matters of concern in internal controls in BRHS’s operations.

It showed that “the allowance for doubtful accounts estimate was significantly understated” resulting in a $4.1 million adjustment in accounts-receivable reserves and credit balances in the 2009-2010 financial statements.

It also identified “certain errors” in the calculation of depreciation and amortization expense, resulting in a $1.5 million adjustment in the health system’s depreciation expense.