Georgia's Oconee Hospital Defaults Again

BRADENTON, Fla. - The trustee for Georgia's Oconee Regional Medical Center notified bondholders that the hospital has defaulted for a second time this year.

U.S. Bank N.A. said Tuesday that the hospital paid interest on its bonds Dec. 1, but made no principal payment.

It's the second default this year for the 140-bed hospital in Milledgeville, according to notices posted on the Municipal Securities Rulemaking Board's EMMA filing system.

Earlier notices reflected ongoing financial distress and recent changes in hospital management, U.S. Bank said.

In June, Oconee planned to issue working capital bonds to "maintain the business of the hospital" while evaluating strategic alternatives.

"The payment of the interest component of the December 1, 2016 debt service payment was funded solely from proceeds of the 2016 working capital bonds," the trustee said in Tuesday's notice. "Unpaid principal on the bonds will continue to accrue interest in accordance with the bond documents until paid."

The notice gave no indication when principal debt service was expected to be paid.

Oconee missed its June 1 bond payment, which led S&P Global Ratings to slash its ratings three notches to D on June 13.

The rating actions placed $22.6 million of bonds issued in 1998 at the bottom of the junk scale.

The bonds were issued on behalf of the medical center by the Baldwin County Hospital Authority.

Previous notices on EMMA said the investment banking firm Houlihan Lokey had been hired to help the medical center address its chronic financial distress.

A working group of bondholders is in contact with hospital officials.

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