CHICAGO - The Illinois Finance Authority board this week advanced borrowing plans by the prominent Chicago-based Museum of Science and Industry and Provena Health and three small privately placed issues as the authority steps up its efforts to help borrowers access the tax-exempt market.
The Museum of Science and Industry received preliminary approval for its sale of up to $115 million to refund and restructure $30.4 million, pushing out the final maturity. Another $113 million will provide new money and refinance interim taxable debt relating to the $205 million Rediscover Science Campaign.
The campaign calls for the construction of new interactive exhibits "designed to inspire children and students to achieve their full potential in the fields of science, technology, medicine, and engineering," according to IFA documents.
The remainder is new money that will finance the purchase and installation of a $15.5 million heating and air conditioning system that will provide building-wide temperature and humidity control. The system is especially important for newer exhibits with computer controls.
Banc of America Securities LLC is underwriter, Kenneth Kerznar is financial adviser to the museum, and Chapman and Cutler LLP is bond counsel. The museum is planning to use a variable-rate structure with letter of credit support. The museum, the oldest of its kind in the country, opened in 1933 in a renovated building that was part of the Century of Progress Exposition in 1893. It receives about 1.5 million visitors annually.
Provena Health received final approval for its plan to borrow up to $200 million to refinance outstanding taxable debt that paid for various projects at its facilities. The Catholic system operates six hospitals, 16 long-term care facilities, and 28 clinics in Illinois and Indiana.
Provena intends to issue fixed- and variable-rate demand bonds that would carry letters of credit from JPMorgan Chase Bank, Northern Trust Co., and Fifth Third. Provena is rated Baa1 by Moody's Investors Service and A-minus by Standard & Poor's. The system is using JPMorgan as its underwriter and Jones Day as bond counsel. Kaufman Hall & Associates is its financial adviser.
The private placements - all being purchased by MB Financial Bank - include the Near North Montessori School, which is raising $12 million, Namaste Charter School Inc., which is raising $4 million, and Bethany Methodist Corp., which is raising $15 million. All three unrated transactions received preliminary or final approval at the IFA board meeting this week.
Near North will pay a fixed rate of 5.05% on its 10-year bonds to MB Financial Bank with a closing date expected in June. The school will use the proceeds to finance major renovations to an existing school building that was constructed in 1892 and to build a new gymnasium and other improvements. Greenberg Traurig LLP is bond counsel.
Namaste will pay a fixed rate of 4.97% to MB Financial Bank on the 15-year bonds. Greenberg is also bond counsel on the deal that is expected to close in May. Namaste will use the proceeds to finance an addition to its existing building on Chicago's near south side to allow it to serve students through eighth grade.
The school currently offers kindergarten through fifth grade to 300 students. Once completed, the school expects an enrollment of 450. The school was founded in 2004 to provide both a strong academic instruction and to help children address obesity issues.
Bethany Methodist Corp. will borrow $15 million to finance its Bethany Gardens Assisted Living Center project at Bethany Terrace Nursing Center in the north Chicago suburb of Morton Grove. Bethany will pay a fixed rate of 4.74% on the 25-year issue to MB Financial Bank. Greenberg is bond counsel on this transaction as well. The facility will include 52 units and will be constructed in a building on the existing campus.
"Access to the capital markets and the cost of accessing the capital markets continue to be a challenge" for some borrowers that use the IFA, especially for smaller, lower-rated, or nonrated nonprofits, said executive director John Filan.
IFA program manager Sharnell Curtis Martin said the agency helped to facilitate the private placements with MB Financial Bank, which had relationships with several of the borrowers, and that the schools otherwise would have had a difficult time issuing tax-exempt debt. With the balance sheet of its parent organization, Bethany could have issued debt but the private placement provided the most economic means to raise the funds it needed.
The board also adopted a resolution aimed at streamlining the approval process to cut down on the time it takes for local governments to use the IFA's pooled Local Government Bond Program. The IFA took similar steps as borrowers last year sought to rush to the market to restructure existing auction-rate securities after that market collapsed.
