NEW YORK - Standard & Poor's Ratings Services said it revised the rating outlook to positive from stable and affirmed its A underlying rating (SPUR) on Hospital Service District No. 1 of the Parish of Terrebonne, La.'s $43.0 million series 1998 and $16.6 million series 2003 hospital revenue bonds issued for Terrebonne General Medical Center (Terrebonne, or TGMC). In addition, Standard & Poor's assigned its A long-term rating to the district's $41.1 million series 2010 hospital revenue bonds issued for TGMC.
"The rating actions reflect our view of TGMC's strong fiscal 2010 operating performance, robust balance sheet, and pro forma debt service coverage metrics," said Standard & Poor's credit analyst Karl Propst.
Terrebonne posted a $3.5 million operating gain (2.0% margin) for the fiscal year ended March 31, 2010. Net excess income was $9.2 million (or 5.1%). EBIDA was $24.8 million, generating 5.8x pro forma maximum annual debt service (MADS) coverage (or 4.6x coverage adjusted for operating lease expense). In comparison, in fiscal 2009 TGMC generated an operating loss of $381,000, with excess income of $6.1 million (a 3.6% excess margin). MADS coverage based on current pro forma debt service was 5.4x (4.0x on a lease adjusted basis).
Unrestricted liquidity continues to grow and on June 30, 2010, totaled $161.7 million, equal to 411 days' cash on hand and about 2.8x pro forma long-term debt (series 2010 includes no new money other than costs of issuance).
Proceeds from the series 2010 bonds will fully refund the district's outstanding series 1998 bonds, at which point we will withdraw our rating on the 1998 bonds. Management projects the refunding will achieve net present value interest expense savings of $1.65 million for TGMC.
Terrebonne is a 321-licensed-bed (179 staffed) acute-care hospital in Houma, La., about 60 miles west-southwest of New Orleans. Terrebonne Parish Hospital Service District No. 1 owns and operates the medical center. Terrebonne has $57.6 million in total revenue bonds, secured by a pledge and assignment of all revenue, after hospital-derived operating expenses.
