CHICAGO - The Illinois Finance Authority advanced deals totaling more than $1 billion for several universities, non-profits like the Chicago Symphony Orchestra, and health care providers including $400 million to help finance Elmhurst Memorial Healthcare's new facility.
A handful of borrowers also sought approval to restructure their existing auction-rate securities or pieces of their insured variable rate holdings. The numbers, however, are small compared to the rush of borrowers that sought approval at the board's March meeting to restructure in excess of $3 billion to stem the rising interest costs that have followed the collapse of the auction rate market in February.
The board gave final approval to Elmhurst's plans to borrow about $390 million including $300 million of new money bonds to finance construction of a $470 million replacement hospital, $50 million to refund variable rate bonds that had included a bullet maturity, with the remainder funding a debt service reserve, capitalized interest and issuance costs.
In need of major upgrades, Elmhurst, located west of Chicago, opted to replace its current facility rather than improve it. The Illinois Health Facilities Planning Board at its February meeting awarded the hospital the certificate of need required to proceed with the new 259-bed facility and all necessary local zoning changes have been approved.
"Planning for the hospital has long been in the works," said the hospital's treasury manager Kevin Fitch. "Where we are now the campus is just 10 acres and some buildings are more than 80 years old. The new campus is 50 acres and will enable us to provide more modern amenities."
The hospital will sell a $140 million fixed-rate issue the week of May 5th and a floating rate tranche for $250 million the week of May 19. The hospital does not plan to insure the fixed-rate piece and has lined up letter of credits from four banks for the floating rate bonds.
Citi and Morgan Stanley & Co. are co-underwriters with Ponder & Co. serving as financial adviser and 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. The hospital expects updated reports to be released before the pricing. The hospital does not have any auction-rate debt in its portfolio.
Silver Cross Hospital, located about 50 miles southwest of Chicago in Joliet, received approval to issue up to $120 million to restructure its outstanding ARS that were sold in 2005 and carry insurance from CIFG Assurance North America. The hospital intends to use an estimated $5 million from the transaction to cover the costs of terminating swaps associated with the original debt that is now being refunded using a fixed-rate structure.
The 300-bed hospital is using Lehman Brothers and UBS Securities LLC as underwriters and Jones Day as bond counsel. The hospital carries single A ratings from Fitch and Standard & Poor's. The resolution approved by the board yesterday also authorizes the hospital to extend its auction periods up to 270 days.
Loyola University Chicago received final approval to issue up to $95 million of commercial paper to refund $34.8 million of auction-rate securities and fund new projects at its Lake Shore and Water Tower campuses in Chicago.
The university has seen its interest rates rise to nearly 5% from 3.2% due to the collapse of the auction-rate market adding between $60,000 and $70,000 to the university's monthly interest costs, said Susan Bodin, director of strategic financing and risk management. The maximum rate is limited under a formula based on bond indexes under the original bond documents. The ARS are auctioned every 35 days.
The university is using Banc of America Securities LLC as its dealer/placement agent on the deal that officials expect to market the second week of May, with JPMorgan Chase Bank NA providing a letter of credit. Chapman and Cutler LLP is bond counsel and Kenneth Kerznar is serving as financial adviser. The university carries ratings of A2 from Moody's and an A-minus with a positive outlook from Standard & Poor's.
DePaul University received preliminary approval to issue up to $55 million of revenue bonds to finance the purchase of student housing facilities from MJH Educational Assistance Illinois III LLC. The university wants to exercise its option to now buy a building with 34 units and other dormitories that is has leased from MJH. The university and MJH has a series of agreements on various housing projects under which MJH develops and manages the properties in transactions that are not counted on DePaul's balance sheet.
The university intends to use a fixed-rate structure on the deal with Lehman Brothers serving as the underwriter and Chapman and Cutler serving as bond counsel. DePaul's current ratings are A3 from Moody's Investors Service and A-minus from Fitch Ratings. The university will seek a first-time rating from Standard & Poor's in conjunction with the new issue. Fitch will not be asked to rate the new issue.
The Chicago Symphony Orchestra received approval to sell up to $85 million of variable-rate bonds to refinance a Northern Trust Co. line of credit that the institution recently used to purchase its 2002 auction-rate bonds that had carried insurance from Ambac Assurance Corp.
The new bonds will carry letter of credit from the Royal Bank of Scotland PLC and be structured as variable rate demand bonds that are remarketed weekly. Morgan Stanley is the underwriter with Prager Sealy & Co. serving as financial adviser and Chapman as bond counsel. The orchestra is rated A3 by Moody's.