DALLAS -- MetroHealth in Cuyahoga County, Ohio is eyeing more than $1 billion of borrowing to finance a plan to transform its current campus.
The Cleveland-based county health system announced that by the end of the first quarter of 2017, it plans to borrow up to $1.25 billion to finance the estimated $855 million transformation of the 52-acre campus planned between now and 2023 and for refunding some of the system outstanding debt.
MetroHealth announced the project last week and an aggressive four-month timeline to secure financing. The timing on the bond issuance is still uncertain because the hospital has not hired an investment banker yet. "They would help us define the timeline," said Tina Arundel, a spokeswoman for MetroHealth.
MetroHealth has already embarked on the first part of what is a two-step process required to issue bonds.
The Board of Trustees on November 9 approved the pursuit of a financing plan to issue bonds on its own credit to fund the Transformation Project, and may include the refinancing of some outstanding debt and swaps. The system's previous bonds have been issued via the county.
The actual issuance of bonds would require additional board action and a resolution that is based on specific terms and conditions, explained Arundel.
The board has authorized the pursuit of the implementation of the financing process beginning with an underwriter selection process managed by MetroHealth. Arundel said that once the financing options have been further defined, with the help of the financial advisor, investment banker, and market feedback, the board will evaluate the next course of action.
"Depending on market receptivity and conditions, the board may elect to pursue other alternatives," said Arundel who did not elaborate on those options.
In 2011, experts predicted that MetroHealth would end 2015 more than $40 million in the red. Despite the bleak forecast, MetroHealth ended 2015 with nearly $30 million in operating income, and Dr. Akram Boutros, MetroHealth's president and chief executive officer, said he expects to see positive cash margins again at the end of 2016.
The system has 24 community health centers, four emergency departments, four clinics in Discount Drug Mart stores, five MetroExpressCare locations and nine pharmacies.
MetroHealth System has $93 million of outstanding bonds that are rated A3 by Moody's Investors Service with a stable outlook. S&P Global Ratings and Fitch Ratings rates the health system A-minus with a stable outlook. The bonds are issued by Cuyahoga County on behalf of MetroHealth.