H2C Advises Franciscan Missionaries of Our Lady Health System on $150 Million in Taxable Bond Financing and $78 Million Taxable Direct Placement
posted on Jan. 31, 2020
NEW YORK — Hammond Hanlon Camp LLC (“H2C”), a healthcare-focused strategic advisory and investment banking firm, served as the exclusive financial advisor to Franciscan Missionaries of Our Lady Health System, a Baton Rouge, La.-based health system (“FMOLHS” or “the System”), in the issuance of $78 million in Series 2019A taxable, fixed-rate direct placement bonds and $150 million in Series 2019B taxable, fixed-rate public bonds (collectively, the “Bonds”).
The 2019A proceeds were used to refinance the Series 2005B ($42.5 million) and 2015B ($35.2 million) Bonds, and the 2019B proceeds were used to finance capital projects.
The 2019A bonds were structured with PNC Bank as a 10-year, fixed-rate direct placement. The 2019B bonds, rated A2/A/NR, were structured as a 3.914 percent coupon bond with a bullet maturity in 2049. The pricing benefited from a rally in U.S. Treasury Rates that had occurred in the two months leading up to the pricing.
FMOLHS executed a treasury rate lock (“T-Lock”) that fixed the 30-year treasury benchmark at 2.142 percent, thereby eliminating underlying interest rate risk. By the time the 2019B Bonds were priced, the T-Lock was “in-the-money” by approximately $3.1 million. With the issuance of the Bonds, FMOLHS was able to take advantage of attractive long-term rates; extend amortization, thereby creating cash flow relief; and finance otherwise ineligible projects on a taxable basis. H2C also helped formulate a Springing Master Trust Indenture that modernizes FMOLHS’s existing Master Trust Indenture.
“H2C worked with FMOLHS to develop a plan of finance and helped us accelerate our time to market and maximize flexibility regarding the use of proceeds," said Jeff Limbocker, CFO, FMOLHS. "H2C has led the execution on multiple financings for the System over the past 15 years and has continued to help FMOLHS achieve its capital structure goals.”
“The 2019 financing allowed FMOLHS to lock in historically low fixed rates," said Elaine Yao, Managing Director, H2C. "FMOLHS is an integral part of the Louisiana and Mississippi healthcare communities, and the expansion of its footprint will allow the System to grow in a key service area. H2C is honored to serve as FMOLHS’s financial advisor.” Email Elaine.
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ABOUT FRANCISCAN MISSIONARIES OF OUR LADY HEALTH SYSTEM
Founded in 1911 and headquartered in Baton Rouge, Franciscan Missionaries of Our Lady Health System is a leading healthcare innovator in Louisiana and Mississippi. The System brings together outstanding clinicians, the most advanced technology, and leading research to ensure that patients receive the highest quality and safest care possible.
As a not-for-profit, mission-focused Catholic healthcare ministry, FMOLHS gives special attention to citizens who are most in need. During the most recent fiscal year, FMOLHS provided more than $39 million in unreimbursed care and community support to the underprivileged.
The System is one of the largest in Louisiana, with hospitals, clinics, and physicians located throughout Louisiana and in Mississippi. FMOLHS provides care to almost half of Louisiana’s citizens and serve in Mississippi's largest metropolitan area. Learn more.
ABOUT HAMMOND HANLON CAMP LLC
Hammond Hanlon Camp LLC (“H2C”) is an independent strategic advisory and investment banking firm committed to providing superior advice as a trusted advisor to healthcare organizations and related companies throughout the United States. H2C’s professionals have a long track record of success in healthcare mergers and acquisitions, capital markets, real estate, and restructuring transactions, acting as lead advisors on hundreds of transactions representing billions of dollars in value. Hammond Hanlon Camp LLC offers securities through its wholly-owned subsidiary H2C Securities Inc., member FINRA/SIPC. For more information, visit h2c.com.
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“H2C worked with FMOLHS to develop a plan of finance and helped us accelerate our time to market and maximize flexibility regarding the use of proceeds.”
— Jeff Limbocker