CHICAGO — The Illinois Finance Authority last week advanced financings on behalf of Loyola University of Chicago and Lake Forest College to help fund upgrades to residential and other student facilities considered key to the schools’ appeal.
Loyola sold about $150 million of taxable bonds last week and will enter the market on Wednesday with about $100 million of new-money and refunding tax-exempt debt. The IFA is serving as issuer for the tax-exempt bonds.
The new-money piece of the tax-exempt bonds will help finance two new student residence halls and a new academic building, and renovate existing academic and residential facilities. The refunding will take out bonds sold in 2003 and 2004.
Morgan Stanley is senior manager with PNC Capital Markets LLC as co-manager. Chapman and Cutler LLP is bond counsel and Jones Day is borrower’s counsel with Mickeni LLC serving as financial advisor.
The school, founded in 1870 as St. Ignatius College, has an enrollment of 16,000 students at its three primary campuses in downtown Chicago, on the northern Chicago shore of Lake Michigan, and its health care campus in the western suburbs. It also operates a campus in Rome, Italy.
The school carries ratings of A2 from Moody’s Investors Service and A from Standard & Poor’s.
Moody’s analysts said the rating on $452 million reflects the school’s strong leadership with best practices for budgeting and operations. Moody’s factored in the additional debt when it awarded a one-notch upgrade last summer after the sale of its hospitals assets to Trinity Health.
“Other positive factors are LUC’s stable student market position as an urban comprehensive university in Chicago, as well as the favorable position as the only Jesuit Catholic university in the Chicago region, trends of good tuition revenue growth, good liquidity and extremely strong operating performance and cash-flow generation,” Moody’s wrote.
The strengths are offset by a substantial increase in the school’s debt levels to fund campus projects, leaving it with a thinner balance sheet cushion.
Lake Forest College will borrow $43 million to finance the demolition of existing facilities and for the design, development and construction of a 60,000-square-foot, 235-bed student housing facility and related projects, and may refund some up to $20 million of the 1998 bonds.
“The project will replace outdated student housing” and “will provide amenities that are critical in student recruitment,” according to IFA documents.
The IFA gave preliminary approval to the deal at its meeting last week. The school, located in a wealthy region north of Chicago along Lake Michigan, was established in 1857 and has an enrollment of 1,500.
It does not currently carry ratings but has applied to Moody’s and S&P and expects to receive ratings in the low-to-mid investment-grade level, according to the IFA. The bonds would be secured by a general obligation pledge of the school.
RBC Capital Markets is underwriter. Chapman is bond counsel and borrower’s counsel is Drinker Biddle & Reath LLP.
The IFA board also gave preliminary approval to the University of Chicago Medical Center’s plans to refund up to $85 million of debt from a 2001 issue. The bonds would be secured by a security interest in the unrestricted receivables of the obligated group.
The medical center includes three hospitals — an adult patient care facility, a women’s hospital, and a children’s hospital — located on the main campus of the University of Chicago.
JPMorgan is underwriter with Jones Day is bond counsel. Katten Muchin Rosenman LLP is borrower’s counsel and Melio & Co. is financial advisor. The medical center’s debt is rated in the low-double-A category.
