Fort Wayne, Indiana, based Parkview Health will use a forward delivery structure to refund bonds.
The health system, using the Indiana Finance Authority, will price $22 million of bonds to refund 2009 bonds for savings and close on the deal in February.
It is also selling roughly $74 million of tax exempt bonds and $33 million of taxable bonds scheduled to price on Oct. 2.
The bond proceeds will be used to support the construction of a six-story addition to Parkview Regional Medical Center that will add 72 beds and come on line in late fiscal 2020. The project is part of the health system’s inpatient capacity project. It is expected to cost $115 million and will address current capacity issues as well as room for future growth.
“The number of people who choose Parkview for their care continues to rise. We have deployed many initiatives to best meet these growing needs, including investments that have allowed for increased capacity at PRMC and Parkview Hospital Randallia. However, we find our Allen County inpatient bed capacity is insufficient to meet this growing demand," said Mike Packnett, president and CEO, Parkview Health in a statement.
Forward delivery bonds are an alternative to tax-exempt advance refundings, which are banned under the new federal tax law. This is where an issuer sells tax-exempt bonds to an underwriter under a bond purchase agreement with a longer-than-normal delivery date so that the closing occurs within 90 days before the redemption date of the bonds to be refunded.
JPMorgan is the senior manager.
Moody’s Investors Service affirmed its Aa3 rating on the bonds; the outlook is stable. S&P assigned its AA-minus rating to the bonds; the outlook is stable. The system has about $576 million of outstanding debt.
“The stable outlook reflects our belief that Parkview will remain the market leader, translating healthy demand into strong margins and continued balance sheet growth,” Moody’s said.
S&P said that the health system has experienced growth in its impatient utilization as others in health care have noted softness. The rating agency attributed the growth to the health systems focus on expanding its service lines and continued recruitment of physicians.
The system’s inpatient capacity projects include construction of a new six-story, 168,000-square-foot medical tower and renovations to the Women’s and Children’s Hospital on the PRMC campus.
It also includes a renovation to the 4th floor of the Parkview Randallia Hospital. The new facility will also include 63,000 square feet of shell space that will allow for future expansion plans to support expected inpatient and ambulatory care growth.
In Fort Wayne and northeast Indiana, the system operates six acute care facilities, a behavioral health hospital, a tertiary care center and, through a joint venture, an orthopedic specialty hospital for a combined total of 880 beds in service.
The system had approximately $30 million annual revenues in 2017.
