CHICAGO - The Illinois Finance Authority advanced borrowing plans yesterday for more than two dozen hospitals and health systems that could flood the market in the coming months with more than $3 billion in paper from borrowers seeking new money for construction projects and to shed their auction-rate structures.

In preliminary applications, Elmhurst Memorial Healthcare wants to borrow up to $540 million in new money and refunding bonds, Northwest Community Hospital would issue up to $300 million of new money and refunding bonds, and Provena Health would issue up to $667 million of debt.

Elmhurst, located west of Chicago, would use $312 million of the sale to finance construction of a $470 million replacement hospital with the remaining up to $228 million available for refunding existing variable-rate debt. The hospital building is in need of significant repairs and upgrades and officials opted to replace the facility over improving the existing one. The Illinois Health Facilities Planning Board at its meeting last month awarded the hospital the certificate of need required to proceed.

The new deal is expected to price this spring and include both fixed- and floating-rate bonds. Officials expect to insure the fixed-rate piece and obtain a letter of credit on the floating rate chunk. Citi and Morgan Stanley are co-underwriters with Jones Day serving as bond counsel.

Fitch Ratings recently affirmed Elmhurst's A credit, citing its strong liquidity of 533 days cash on hand and profitable operations as credit strengths. Moody's Investors Service rates Elmhurst A2 with a negative outlook.

Northwest Community Hospital in suburban Arlington Heights would use about $123 million of its spring sale to help finance construction of a new patient tower, parking garage, emergency department, and other projects. The deal would also allow the hospital to convert its auction-rate bonds from a 2002 issue to another mode.

The hospital would use a mixed fixed-rate and floating-rate structure. The hospital expects to secure a letter of credit for the floating-rate piece but will decide on insurance on the fixed rate closer to pricing. Northwest is rated AA by Standard & Poor's and Aa3 by Moody's. Goldman Sachs & Co. is the underwriter and Jones Day is bond counsel.

Provena, which operates six hospitals and other facilities in Illinois and Indiana, plans a sale in May of up to $667 million in a major restructuring of its debt portfolio. The deal calls for the refunding of $134 million of Provena's 1998 fixed-rate bonds, the conversion of all of Provena's auction-rate and variable-rate demand bonds and the restructuring of the system's $60 million taxable commercial paper program and $170 million taxable term loan that financed an expansion of Provena Saint Joseph Medical Center.

The system's floating-rate debt to be restructured was sold in 1998 and includes a $72 million series of auction-rate securities, a $17 million series of ARS, a $112 million of ARS, and a $47 million of variable-rate bonds.

All were insured by MBIA Insurance Corp.JPMorgan is the underwriter and Jones Day is bond counsel. Kaufman, Hall & Associates Inc. is financial adviser. The new deal would include a mix of fixed-and floating-rate bonds with JP Morgan Chase providing a letter of credit on the variable-rate chunk.

Alexian Brothers received final approval for its plans to issue up to $55 million of new money to cover the costs of building and equipping a new tower at Alexian Brothers Medical Center in Elk Grove Village. The system, which operates three hospitals in the northwest suburbs of Chicago, intends to issue the bonds with a fixed-rate structure. Merrill Lynch & Co. is underwriter, Kaufman Hall is financial adviser and Jones Day is bond counsel. The system is currently rated A by Fitch Ratings and A3 by Moody's.

Children's Memorial Hospital received final approval for the sale of up to $650 million that would raise new money to finance construction of a $1 billion replacement hospital and restructure all of the hospital's $187 million of outstanding fixed-rate and auction-rate debt. The hospital, however, may not refund all of its debt in the upcoming spring sale, but plans to in the coming years.

Goldman, Sachs & Co. and Morgan Stanley are underwriters while Kaufman Hall is financial adviser, and Jones Day serving as bond counsel. The deal would include a mix of fixed rate and floating rate bonds with a letter of credit provided by JPMorgan

Groundbreaking is set for spring. The hospital received its state CON last month and the Chicago City Council has approved needed zoning changes. The hospital is rated A-minus by Standard & Poor's and AA-minus by Fitch Ratings.

Five borrowers submitted first-time restructuring applications that received final approval under revised IFA guidelines. The speedy approval is specifically designed to accommodate borrowers seeking to restructure their auction-rate securities due to the spike in interest rates and failed auctions amid a tightening of credit with nearly daily downgrades of bond insurers being announced due to their subprime market exposure.

Delnor-Community Hospital has approval to convert up to $165 million of ARS issued in 2002 and 2003 and insured by Financial Security Assurance and a 2006 issue insured by Financial Guaranty Insurance Co. to a fixed- and variable-rate structure. The refunding authorization also includes room to cover the fees associated with terminating interest rate swaps. The deal is tentatively scheduled for late spring and inclusion of the 2002 and 2003 bonds is still subject to negotiations with FSA. Standard & Poor's rates the hospital A. Morgan Stanley is the underwriter, Kaufman Hall financial adviser and Jones Day is bond counsel.

Edward Hospital plans to refund up to $250 million, converting all or portions of its 2007 auction rate securities and variable bonds with Ambac Assurance Corp. coverage, subject to negotiations with the insurer. The new structure will include a mix of synthetic fixed-rate bonds and variable rate bonds that would carry a letter of credit and one series retaining Ambac coverage. The hospital, based in the far west suburb of Naperville, is rated A by Standard & Poor's and A2 by Moody's.

Advocate Health Care Network was given authority to issue up to $650 million to refund pieces or all of its auction-rate securities issued in 2005 and 2007 and insured by Ambac. The new structure would include a mix of floating and fixed-rate bonds. The borrower would seek a letter of credit or a standby bond purchase agreement but insurance on the fixed-rate would be decided closer to the April pricing.

Advocate, the largest health care system in the Chicago area, is rated in the low to mid-double-A category by all three rating agencies. Citi is the underwriter and Chapman and Cutler LLP is bond counsel. "The stable outlook reflects our belief that AHCN will maintain its leading market share, very strong financial performance, and low debt levels," Standard & Poor's analyst Kenneth Rodgers wrote in a report last year on the AA credit.

Little Company of Mary hospital received approval for a $150 million restructuring of its ARS insured by MBIA and Swedish Covenant Hospital in Chicago received approval for a $150 million refunding and restructuring of its 1995 variable-rate demand bonds and its 1998 and 1999-issued ARS with some piece of the deal also covering the cost of swap termination payments.

More than a dozen additional borrowers also received approval yesterday for auction-rate restucturings.

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