The University of Medicine and Dentistry of New Jersey plans to refinance up to $575 million of debt before April 15, in part to avoid accelerated debt payments on a series of outstanding variable-rate bonds.
The school is hoping to stave off accelerated payments that will start coming due April 15 and amount to more than $90 million during the next five years on $95 million of Series 2002B bonds that are now bank bonds. UMDNJ wants to refinance the variable-rate debt to fixed-rate mode, or find an alternative liquidity provider. Ambac Assurance Corp. insures the bonds and Bank of America NA provides a liquidity facility.
“The early amortization has been extended by Bank of America a couple of times because the deal was in the process, and the latest deadline is April 15,” said Roger Anderson, executive director of the New Jersey Educational Facilities Authority.
The authority will issue the refunding bonds on behalf of the university.
While the deal has been in the works since last year, Anderson believes UMDNJ can refinance the debt by the April 15 deadline. “We’re confident that we’re going to be able to sell the deal and refund the bank bonds,” he said.
Along with the Series 2002B bonds, the university is looking to refinance other debt, including $34 million of Series 2001A auction-rate lease revenue certificates that it wants to convert to variable-rate mode. The securities carry MBIA Insurance Corp. backing and the new variable-rate bonds will have a letter of credit from Bank of America.
The size of the total package ultimately will depend upon market conditions.
Morgan Stanley is senior manager. Gibbons PC is bond counsel and Acacia Financial Group Inc. is the financial adviser.
UMDNJ has roughly $648 million of outstanding debt. Moody’s Investors Service rates it Baa2 with a negative outlook. Standard & Poor’s assigns a BBB rating with a stable outlook.