Hammond Hanlon Camp LLC Advises Palos Community Hospital on $232MM Refinancing
posted on December 2, 2015

 

CHICAGO – Hammond Hanlon Camp LLC (“H2C”), a healthcare-focused investment banking firm, served as the exclusive financial advisor and placement agent to Palos Community Hospital (“Palos” or the “Hospital”)  in connection with the advance refunding of Palos’ Series 2007A fixed rate and current refunding of Palos’ Series 2015A variable rate bonds.

 

Palos’ new management team’s keen focus on operational improvements and best in class services led to the engagement of H2C to complete a strategic review of Palos’ capital structure.  The results of the capital structure evaluation yielded two concrete recommendations:  given the favorable capital markets, Palos could refinance a portion of its debt for significant savings as well as optimize terms, including the amortization schedule and the covenant package.

 

After identifying the opportunities, H2C went to work to determine the ideal structure.  H2C presented scenarios involving public and private placement structures, and after a thorough evaluation of all financing options, H2C and the management team concluded the most beneficial structure would be to refund a portion of the Hospital’s existing debt with direct placement bonds.  

 

The subsequent Request for Proposal process yielded aggressive responses from prospective lenders, allowing Palos to restructure both the 2015A bonds and the 2007 bonds for significant savings and other benefits.  H2C developed a detailed timeline to complete the financing in an expedited manner, including providing a draft credit agreement so that the banks could agree to the requested terms before the final bank selections were made.  With its AA- rating, Palos was able to secure long-term commitments of ten and fifteen year terms from three, strong U.S. and Canadian banks, while substantially reducing its annual debt service and preserving important operating flexibility.

 

”H2C’s leadership and expertise helped drive an efficient process that yielded an excellent outcome for Palos,” said Charles E. Reiter III, Executive Vice President at Palos.  “The restructuring will provide both short- and long-term benefits to the Hospital, including the release of substantial funds for use in patient care.”

 

The refinancing closed in an aggressive two month timeframe and was a noteworthy success for Palos.  “After we took the time to understand Palos’ goals, H2C tailored the finance plan to restructure both series of bonds together, which provided the opportunity to level debt service requirements, accelerate amortization and increase cash flow savings.  [BH1] As a result, Palos’ overall cost of capital was reduced from 4.04% to 2.71%,” said Victoria Poindexter, Principal with H2C.  Email Victoria