DALLAS - Tulsa's St. Francis Health Care System will go to market in November with $180 million of taxable and tax-exempt revenue bonds in its first issue in nearly a decade and the largest in its 43-year history.
The bonds, backed by hospital revenues, will be issued through the Tulsa County Industrial Authority, which approved the deal on Sept. 13. The bonds will be issued in three series.
About $55 million of Series A bonds will be subject to taxes and will finance construction of the Tulsa Heart Hospital, a joint venture with local cardiovascular surgeons.
An estimated $115 million of the tax-exempt Series B bonds will go toward new capital projects, such as an outpatient imaging center, a new parking garage at St. Francis Hospital, renovations at Laureate Psychiatric Clinic and Hospital, and installation of new computer systems.
About $10 million in tax-exempt Series C bonds will refinance a bond issue sold for Laureate in 1989.
The nonprofit corporation's last issue came in two series in 1993 for a total of $71.7 million in refunding bonds to refinance a 1991 bond issue. While other major health care systems have struggled in recent years, St. Francis is experiencing strong growth, said chief financial officer Barry Steichen.
"Our operations have improved over the past three years, as has the strength of our balance sheet," he said. "We're under-leveraged, and we feel like the time is right to get back into the market."
While the bonds will be issued by the Tulsa County Industrial Authority, they will carry the rating of St. Francis, which has historically been AA from Standard & Poor's. The hospital has not been rated by Moody's Investors Service or Fitch Ratings.
While all details of the issue are still to be worked out, Steichen said St. Francis expects to use Goldman, Sachs & Co. as lead underwriter and financial adviser, with the Tulsa law firm of Hilborne & Weidman as bond counsel. Vinson & Elkins is expected to serve as underwriter's counsel.
The heart hospital, which will not share the campus of the existing St. Francis Hospital in Tulsa, is expected to open in 2004, Steichen said.
"It will be the center of excellence for cardiac care, with premier cardiologists who have come together and constructed the first heart center of its type in the market," he said.
Since its founding as a 275-bed hospital by Oklahoma oilman William K. Warren in 1960, St. Francis has grown into a major health system, with branches in Stillwater and Broken Arrow. The Laureate Hospital in Tulsa started with funding from the William K. Warren Foundation in 1989.
