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.