CHICAGO — The Illinois Finance Authority board signed off Rush University Medical Center $600 million refunding and on deals that will help finance Chicago Navy Pier's big overhaul and finance construction of a compressed natural gas station for the Pace suburban bus service.
Rush University Medical Center Obligated Group received approval for the sale of up to $660 million in a deal that would primarily refund debt sold in 2006 and 2009 with about $37 million of new money being raised.
Rush operates a 677-bed hospital on Chicago's near west side, a university, an orthopedic hospital that houses Midwest Orthopedics Group, an 800-member physician group, Rush-Copley Medical Center, and Rush-Copley Memorial Hospital. The system generated more than $1.8 billion in revenues last year.
Rush carries ratings at the mid-single-A level from Standard & Poor's and Moody's Investors Service and an A-plus from Fitch Ratings.
Goldman Sachs and Bank of America Merrill Lynch would senior manage the bonds with Loop Capital Markets LLC, Cabrera Capital Markets LLC, and William Blair & Co. as co-managers. Chapman and Cutler LLP is bond counsel.
The conduit authority approved the issuance of up to $46 million for Navy Pier Inc. to help pay for projects in a planned makeover of the city's big tourist attraction. Projects being financed include the installation of a replacement Ferris wheel and necessary structural improvements and the acquisition, construction, repair, rehabilitation of a new live performance theater.
The existing Crystal Garden and family pavilion area are also being renovated at the pier which is owned by the Metropolitan Pier & Exposition Authority but managed by the not-for-profit Navy Pier Inc.
Navy Pier opened as a municipal pier in 1916 as part of Daniel Burnham's "Master Plan of Chicago" and later was named Navy Pier in honor of the Navy personnel housed there during World War I. It later fell into a dilapidated state with broken down sheds and was considered an eyesore.
The pier reopened in 1995 after a $150 million makeover and is now home to a children's museum, Chicago Shakespeare Theater, and shops, restaurants and other attractions that draw nearly nine million visitors annually.
A $115 million overhaul was unveiled in 2011 and is slated for completion in 2016 with the help of private contributions. The bond proceeds will finance additional redevelopment costs, according to IFA documents.
The unrated bonds are secured by a gross revenue pledge and security interest in the borrower's accounts receivables, receipts and collateral assignment from all rents and profits from pier leases. The securities will be purchased directly by Fifth Third Bank.
The bonds are divided into two series, one for $26.5M million tied to the Ferris wheel project, known as the observation wheel, that will be amortized over 20 years, and the other for up to $20 million tied to the theater and pierscape project that will mature in 2023. The Shakespeare Theater is contributing $13 million to the project.
"The long-term strategic plan for Navy Pier is to improve the mix of retail, dining, cultural and entertainment options in an effort to further expand its customer base to drive an increase in year-round attendance," according to IFA documents. "A key component of the plan is the redevelopment of the infrastructure to update the look and feel of Navy Pier and improve the overall facility."
The board also signed off on plans from Pace, the suburban bus division of the Regional Transportation Authority of Illinois, to sell $12 million of local government program revenue bonds to finance the conversion of a south suburban facility that services its fleet to use compressed natural gas fuel.
The sale would mark a first for the unrated Pace, which will not seek ratings for the debt that will be sold competitively as soon as next month. In addition to an exemption from federal income taxes, the bonds' interest would be exempt from state taxation under the state law authorizing the sale, offering investors a rare double-exemption for Illinois-based bonds. Pace has authorization under the law to sell up to $100 million for four specified projects.
Acacia Financial Group Inc. is advising Pace and Thompson Coburn LLP is bond counsel and IFA advisor is Sycamore Advisors Inc.
The board also approved a one-year contract for its executive director Christopher Meister, whose current one-year appointment expires this week. Meister agreed to resign if Gov.-elect Bruce Rauner wants to hand pick his own appointment for the position after his inauguration next month.