Texas' Stephen Austin University Selling $23M for Nursing School

DALLAS - Stephen F. Austin State University will issue $23 million of revenue bonds next week to build a nursing school and expand other buildings on its Nacogdoches, Tex., campus.

The bonds will be sold through the Texas Public Finance Authority Financing System with Morgan Keegan & Co. as senior manager. Co-managers are Citi, Edward Jones, RBC Capital Markets, and Siebert Brandford & Shank.

First Southwest Co. serves as financial adviser, and McCall, Parkhurst & Horton LLP is bond counsel.

The issue will include current interest and premium capital appreciation bonds, payable from the university's pledged revenues. Maturities run through 2029.

The bonds are rated A-plus by Fitch Ratings. Moody's Investors Service, which has rated previous revenue bonds A2, has not yet reported its rating on the upcoming deal. The Fitch rating, with a stable outlook, applies to $133 million of outstanding parity bonds.

"The A-plus rating is primarily anchored by SFASU's historically healthy liquidity; track record of generally balanced to positive operating performance; and experienced, proactive management team which has made significant investment in both facilities and programs to position SFASU in a highly competitive marketplace," Fitch analysts wrote.

Possible credit concerns include high debt burden compared to similarly rated public universities and a price-sensitive market, "which limits SFASU's ability to materially increase tuition and fees to offset its increased debt carrying charges and rising costs associated with its expanded and upgraded campus."

With a scenic campus in the Piney Woods of East Texas, Stephen F. Austin attracts students statewide, with a 2008 enrollment of 11,900, the highest in more than a decade.

Established in 1923 as a college for teacher training, the university now has six colleges - business, education, fine arts, forestry and agriculture, liberal and applied arts, and science and mathematics - offering 83 baccalaureate degrees in over 120 subject areas, masters degrees in 46 areas, and doctoral degrees in forestry and education.

Stephen F. Austin is one of four public universities in Texas not affiliated with university system.

About $13 million of the upcoming bond proceeds will be used to build a nursing school, serving one of the fastest growing majors within the School of Science and Mathematics. The remainder of the bond proceeds will be used for deferred maintenance.

Gov. Rick Perry signed HB 1775 authorizing the bond issue on Aug. 14, 2007. Several months earlier, the prominent DeWitt family had presented to the university a gift of land and facilities, valued at $1.4 million, as a site for the school.

Without efforts to train more nurses, Texas would have 27,000 fewer nurses than needed in 2010, according to the Texas Center for Nursing Workforce Studies. In East Texas, nearly 10% of nursing jobs go unfilled because of employee shortages. Meanwhile, nursing schools across the state are forced to turn away thousands of candidates each year due to limited facilities and a shortage of instructors.

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