Melio & Company advised NorthShore University HealthSystem on the Fixed Rate Refunding of $136.425 million of VRDBs
In June 2010, on behalf of NorthShore University HealthSystem (NSUHS), the Illinois Finance Authority issued $136,425,000 of Fixed Rate Revenue Refunding Bonds, Series 2010. The bond proceeds were used to refund prior bonds, pay swap termination payments and pay certain expenses incurred in connection with the issuance of the Series 2010 Bonds. The Senior Managers on the transaction were J.P. Morgan and Barclays with Wells Fargo serving as Senior Manager and Loop Capital Markets serving as Manager.
In addition to advising on the Series 2010 Bond issuance, Melio & Company assisted in implementing the overall plan of finance which included reducing interest rate risk, derivative exposure, bank exposure, and reevaluating the capital structure. Through a SBPA RFP process, NSUHS was able to negotiate favorable SBPA pricing and terms that resulted in increased diversification of banks and over 15 basis points of savings. In order to smooth out debt service, NSUHS re-amortized Series 1995 and 1996 Bonds without triggering a tax re-issuance and extending the life of the bonds. The Series 2010 Bonds were issued as fixed rate debt to reduce NSUHS’s prior reliance on 100% variable rate debt. In addition to reducing interest rate exposure through the issuance of the Bonds, a portion of the proceeds were used to reduce their derivative exposure by terminating existing swaps. NSUHS was able to increase their committed debt to 34% through issuing a debut issuance of fixed rate debt within a well implemented plan of finance. As a result, the Bonds were well received in the capital markets and were rated Aa2/AA by Moody’s and S&P.