CHICAGO — The Illinois Finance Authority this week advanced plans for $750 million of health care borrowing planned by Alexian Brothers Health System, the University of Chicago Medical Center, Palos Community Hospital, and a continuing-care community.
Alexian Brothers received preliminary approval to issue up to $150 million of fixed-rate bonds this spring to refund about $70 million of outstanding debt and raise new money to finance a modernization of its St. Alexius Medical Center facility in the Chicago suburb of Elk Grove Village. The refunding would restructure existing variable-rate debt that carries a letter of credit.
The system — sponsored by the Congregation of Alexian Brothers, Immaculate Conception Province, and a Roman Catholic religious institute — operates three hospitals in Elk Grove and Hoffman Estates along with life-care centers and nursing homes in Missouri, Tennessee, and Wisconsin.
The Alexian Brothers launched their ministry in the United States in 1866 when they opened an eight-bed hospital in Chicago that was destroyed in the Great Chicago Fire of 1871.
Alexian Brothers is rated A by Fitch Ratings and A3 by Moody’s Investors Service. Bank of America Merrill Lynch would be underwriter. Kaufman Hall & Associates is the financial adviser. Jones Day is bond counsel.
Friendship Village of Mill Creek received preliminary approval to issue up to $125 million of unrated bonds to finance the construction of a continuing-care retirement community in Geneva, 40 miles west of Chicago, and to repay $9 million of bond anticipation notes issued in 2007 and 2008 for the project. The issue is slated for spring. Groundbreaking is on tap for May and completion is expected in March 2012. Initial occupancy of independent units is slated for July 2011.
The community, being built on 18.5 acres, will offer 162 independent-living units, 10 catered living apartments, 46 assisted-living units, 20 memory-support assisted-living units, and 37 nursing beds.
Friendship Senior Options, the sole corporate member of Evangelical Retirement Homes of Greater Chicago, which does business as Friendship Village of Chicago, is the developer.
Greenfields of Geneva is a stand-alone credit for the financing but Friendship Village will provide management services and as part of the financing is considering providing some form of credit support. The bonds would be secured by a mortgage and revenue pledge.
“The borrower is currently working on a feasibility study with an independent and qualified accounting or consulting firm acceptable to the authority demonstrating the financial viability of the project,” according to IFA documents. Ziegler Capital Markets is the banker. Peck Shaffer is bond counsel and Jones Day is special counsel.
The 436-bed Palos Community Hospital, which serves Chicago’s south suburbs, received preliminary approval to sell up to $275 million of bonds to finance construction of a new bed tower and other improvements. The hospital expects to issue just $170 million and take out a bank loan for the remainder.
Palos opened in 1972 with 265 beds but has since grown due to population demands, “with major building additions and modernizations in 1975, 1978, 1992, 1995, 2006, and 2009,” according to IFA documents.
Goldman, Sachs & Co. is underwriter. Jones Day is bond counsel. The hospital is not currently rated but is expected to seek ratings. IFA documents said a rating in the mid-single-A category is expected.
The University of Chicago Medical Center received final approval to refund up to $166 million. The medical center includes a main campus, a children’s hospital, and a women’s hospital.
The medical center will convert variable-rate debt issued last year to fixed rate. The system is rated AA-minus by Fitch and Standard & Poor’s and Aa3 by Moody’s. Barclays Capital and JPMorgan are co-senior managers. Melio & Co. is advising on the deal.