Hammond Hanlon Camp LLC Advises Hawai’i Pacific Health on $48.1 Million Direct Purchase Refinancing

posted on Aug. 8, 2019

 

SAN DIEGO — Hammond Hanlon Camp LLC (“H2C”), a healthcare-focused strategic advisory and investment banking firm, through its wholly-owned subsidiary, H2C Securities Inc. ("H2C"),

served as the exclusive financial advisor to Hawai’i Pacific Health (“HPH” or the “System”) in the issuance of Series 2019 Bonds totaling nearly $48.1 million to refinance existing debt. The fixed-rate, tax-exempt bonds were directly placed and structured with a 2033 maturity.

 

HPH’s Series 2013C variable rate bonds were subject to a mandatory tender that required repaying or refinancing the debt on or before July 1, 2020. The System pursued a bond refinancing, keeping in mind the following objectives:

 

• Eliminate renewal risk and attain competitive pricing on the refinancing.

• Avoid exposure to additional risk and reduce risk, where possible.

• Achieve an efficient issuing process.

• Match or improve existing covenants.

• Terminate the interest-rate swaps.

 

In late 2018, HPH engaged H2C, which led a competitive bank selection process resulting in long-term committed capital at a very attractive price and improved covenants.

 

H2C evaluated several scenarios for the plan of finance. Indicative terms received from multiple banks demonstrated that tax-exempt, fixed-rate direct purchase bonds would be more cost effective than a taxable, fixed-rate private placement, yet still achieve a 15-year tenor commitment to avoid future renewal risk. HPH’s strong credit and infrequent issuance created significant demand for the bonds, as demonstrated by multiple banks submitting indicative interest rates for three long-term tenors (10, 12, and 15 years). H2C structured a highly competitive process to take advantage of this demand, resulting in very attractive pricing for HPH.

 

H2C also provided advice and guidance on the structure of the bonds that enabled HPH to avoid the additional administrative burden of a TEFRA hearing. Through creative bond structuring, H2C prevented the average life of the Series 2019 Bonds from exceeding that of the prior bonds, eliminating the need for a hearing.

 

In addition, H2C managed the swap termination process with the counterparty and confirmed the termination fees were based on fair market value, further achieving the System’s goals.

 

“By conducting a targeted bank outreach program, H2C maintained a competitive process, achieving the best possible financing terms for HPH,” said Katie Proux, Vice President, H2C. Email Katie.

 

H2C has long served as a strategic and financial advisor for HPH, including on last year’s $147 million taxable public refunding bond issuance. “We are very pleased to be a long-term partner with HPH. As their financial advisor on this transaction, our team strived to ensure HPH’s financing objectives were achieved, helping to protect the organization’s ability to meet the healthcare needs of the community it serves,” said Bill Hanlon, Principal, H2C. Email Bill.