Deal of the Year 2018 — Health Care: Wisconsin HEFA (Advocate Aurora Health)

The Wisconsin Health and Educational Facilities Authority’s Advocate Aurora deal was the first for the newly-merged 10th largest not-for-profit, integrated health system in the United States.

Advocate Health Care Network and Aurora Health Care, Inc., merged in April, and the new Advocate Aurora system now employs more than 70,000 people including more than 8,000 physicians serving the Chicago and Milwaukee areas.

Seeing an opportunity to leverage the size and credit strength of the newly-formed organization, the system’s management began work on a plan.

Legal counsel determined that $511 million of Aurora’s tax-exempt fixed rate debt was eligible for acquisition financing treatment, which is only available to newly-combined organizations for six months following the merger. This allows not-for-profit borrowers to execute a tax-exempt refunding of tax-exempt bonds that would otherwise not be eligible for advance refunding under the new tax law.

The $1.2 billion financing involved ten different bond series that accessed four distinct borrowing markets including taxable, tax-exempt, mandatory tender, and floating-rate bonds. The deal ultimately resulted in $250 million of cash flow relief over the first five years, and a reduction of annual debt service from $225 million to $174 million.