Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Health System Financing topic
No spam. Unsubscribe anytime.
UAB Health System financing plan approved to refinance St. Vincent's debt and issue tax-exempt bonds
Summary
The board approved phase-one financing for UAB Health System to refinance about $298 million of 2016B/2017B bonds (generating about $26 million total interest savings) and to issue up to $100 million of tax-exempt bonds to reimburse hospital projects, plus a recommendation to formally include St. Vincent's in the obligated group.
Trustees voted to approve a multi-part, phase-one financing for the UAB Health System after staff laid out a plan to capture interest savings and to restructure a portion of St. Vincent's acquisition debt.
Justin Fanning, assistant vice chancellor for investments and treasury, described the phase-one package as three components: a refunding of portions of the 2016B and 2017B bond series ("In total, we plan to refund approximately $298 million of bonds," Fanning told trustees), a cash-optimization strategy that would allow University Hospital to issue up to $100 million of tax-exempt bonds to reimburse an inpatient rehab project and replace taxable St. Vincent debt, and a structural recommendation to formally include UAB St. Vincent's as a member of the obligated group credit.
Fanning said the refunding is projected to generate about $26 million in total interest savings on the refunded series and produce roughly $1.7 million in annual cash-flow savings. On the cash-optimization component he said the strategy would convert a portion of taxable St. Vincent debt to tax-exempt financing, and that the new $100 million issuance was recommended as variable-rate to preserve flexibility for cash flow and credit.
Trustee Simon pressed staff on maturities and savings: "But you're anticipating savings of over a million dollars a year?" he asked. Fanning answered, "About a million and a half." On ratings, staff said the obligated group credit is expected to remain at roughly the same level (A3 / AA-minus) and that rating agencies already incorporate St. Vincent's debt into current ratings; formal inclusion would consolidate reporting and reduce legal/structural complexity.
The committee also discussed phase two of the financing, expected next year, which will focus on refinancing the remaining roughly $580 million of St. Vincent acquisition debt and on longer-term amortization, maturity and interest-rate decisions. Fanning said he expects to return to the board with detailed plans for phase two and that the board would separately approve phase-two parameters.
The committee voted to approve the phase-one financing resolutions, which authorize the issuance of phase-one bonds, permit inclusion of St. Vincent members in the obligated group, and allow staff to proceed with negotiated transactions for phase two as described.
What happens next: Staff will finalize underwriting and financing documents, engage rating agencies and plan pricing (staff projected pricing in August or September), and return next year for phase-two approvals.
