The Virginia Small Business Financing Authority today expects to issue $293 million of new-money and refunding bonds on behalf of Sentara Healthcare, the main health care provider for east Virginia and northeastern North Carolina.
Sentara expects to sell $230 million of new-money debt and $63 million of refunding bonds, Ronald Vinson, treasury director at Sentara, said Tuesday. A retail order period was scheduled for yesterday. The Series 2010 bonds will mature between one and 10 years with term bonds maturing in 15, 20, and 30 years, he said.
The bonds are rated AA by Standard & Poor’s. A rating from Moody’s Investors Service for this deal was not available at press time. Moody’s affirmed a Aa2 rating for Sentara on Dec. 30.
Sentara will use the bond proceeds for a new acute-care facility, Princess Anne Hospital in Virginia Beach. The proceeds also will fund construction of a three-story addition to the Sentara Obici Hospital in Suffolk. The refunding portion will retire bonds issued in 1997 and 1998.
This issuance will increase Sentara’s long-term debt by 42% to $824 million, Standard & Poor’s said. The company had $2.8 billion in total operating revenues in 2008 and $2.7 billion through the first 11 months of 2009. It had a 4.5% operating margin and covered maximum annual debt service 4.2 times. Sentara is required to cover debt service 1.1 times, according to the preliminary official statement.
Sentara operated seven hospital divisions with 1,728 available beds as of Oct. 31, and it owns businesses that offer in-home and urgent care and health insurance. The company serves about two million residents from Virginia’s eastern shore to northeast North Carolina. It dominates the market share for the area with 59% of admissions.
In December, Sentara acquired control of Potomac Hospital Corp. of Prince William County, expanding Sentara’s services into northern and central Virginia. Sentara is not guaranteeing about $66 million of Potomac Hospital’s debt acquired in the deal, according to Standard & Poor’s.
Citi will serve as lead underwriter on today’s sale with BB&T Capital Markets, Bank of America Merrill Lynch, Morgan Keegan & Co., Morgan Stanley, Goldman, Sachs & Co., and Edward Jones serving as co-managers. Kaufman & Canotes PC is bond counsel. Ponder & Co. is financial adviser.