The Internal Revenue Service closed an audit of $61.3 million of revenue bonds issued in 2005 by the Coastal Bend Health Facilities Development Corp. of Corpus Christi, Tex., and has determined the debt can remain tax-exempt.
The issuer disclosed the IRS decision in a material event notice filed last week with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system.
In the notice, the corporation said CHRISTUS Health Obligated Group, which received the bond proceeds, was sent a letter dated May 19 from the IRS stating that the examination had been closed with no change to the bonds.
The notice also said the bonds were originally selected randomly for audit.
The bonds are part of $796.6 million of auction-rate securities and variable-rate debt that were issued by the corporation, the Harris County Health Facilities Development Corp., and the Louisiana Public Facilities Authority. Coastal Bend issued $155.03 million of ARS, revenue, and taxable bonds in the offering.
All the proceeds were loaned to CHRISTUS, to either refund previously issued revenue bonds, finance certain capital projects in Texas, or pay issuance costs, according to bond documents.
CHRISTUS runs more than 40 Catholic hospitals across eight states, as well as several facilities in Mexico, according to its website.
Proceeds from the bonds issued by Coastal Bend were used to refinance $49.9 million and $66.5 million of revenue bonds issued in 1998, finance capital expenditures for certain facilities located in Corpus Christi or reimburse CHRISTUS for capital expenditures already incurred, and pay issuance costs, including a bond insurance premium.
Financial Security Assurance Inc. provided an insurance policy for all the auction-rate securities in the offering, while Ambac Assurance Corp. enhanced the variable-rate debt, according to bond documents.
Vinson & Elkins LLP was bond counsel on the deal, and Citi was the underwriter.
