Hospital Authority OKs final pricing on its bond sales

ALBANY, Ga. -- As part of an overall recapitalization plan, the Hospital Authority of Albany-Dougherty County has approved the final pricing of $107.9 million in bond sales made this week.

This followed an approval by the Hospital Authority on Nov. 8 of a resolution for issuance of 2012 bonds and a resolution for modification to outstanding 2008 Series A and B bond documents, allowing for transactions for the repayment of bonded indebtedness and the issuing of new, publicly available tax-exempt bonds.

"The money changes hands in a couple of weeks, so (the authority) had to approve the sale," explained Kerry Loudermilk, chief financial officer for Phoebe Putney Memorial Hospital, following the body's approval of the sales on Friday.

Loudermilk also said that, in the end, this move will provide long-term financing for a debt structure that works for the best benefit for Phoebe.

"This moves more of our debt into a fixed rate," he said. "It helps us to lower the risk in the long term."

Loudermilk told the authority Friday that there were nearly $500 million in orders made for the bonds. The original intention was to first open the bond sales to just retail orders on Wednesday, and then for institutions on Thursday. Due to strong demand, the two-day marketing period was reduced to one and the bond sales were opened to institutions on Wednesday afternoon.

Since the demand was so high, the bonds were repriced to lower rates than initially anticipated. In the end, Phoebe obtained an all-in cost of capital for 30-year bonds of 3.62 percent, Loudermilk said.

The primary components of the recapitalization plan taking place this year for Phoebe Putney Health System have included refinancing with long-term committed capital the $99 million short-term bank loan used to fund the acquisition of Palmyra Medical Center, paying off Series 1993 bonds and converting the Series 2008 A and B variable rate demand bonds to "bank mode."

The rationale behind this, officials say, was to meet an aggressive time schedule and enter into the market before the expected year-end rush, take advantage of the current low interest rate environment and lower the overall risk of Phoebe's capital structure -- thereby enhancing its credit profile and maintaining AA ratings.

The direct placement for the Series 2008 A and B bond sales is expected to close on Friday, with the Series 2012A expected to close on Dec. 13.

Bank of America Merrill Lynch served as the lead underwriter while Morgan Stanley and Raymond James/Morgan Keegan served as co-managing underwriters for the 2012 fixed rates. Banc of America Public Capital Corp was the purchaser for the variable rate bonds.