Hammond Hanlon Camp LLC Advises WakeMed on Issuance of $365.7 Million in Bond Financing

posted on May 30, 2019

NEW YORK — Hammond Hanlon Camp LLC (“H2C”), a healthcare-focused strategic advisory and investment banking firm, served as the exclusive financial advisor to WakeMed Health & Hospitals, a Raleigh, N.C.-based health system (“WakeMed” or the “System”), in the issuance of $207.7 million in Series 2019A tax-exempt, fixed-rate bonds, $79.0 million in Series 2019B variable-rate demand bonds (“VRDBs”), and $79.0 million in Series 2019C VRDBs (collectively, the “Bonds”). The proceeds of the Bonds will be used to fund projects on two of the health system’s campuses in Raleigh and Cary and to refinance existing indebtedness.

The Bonds, rated A2/NR/A+, were structured as a 3.375 percent serial bond maturing in 2039, a 5 percent term bond maturing in 2044, and a 4 percent term bond maturing in 2049. The Bonds received favorable market reception and were 2.6x oversubscribed. WakeMed also benefited from a rally in Municipal Market Data (“MMD”) that had occurred in the weeks leading up to the pricing.

The Bonds were issued through the Public Finance Authority in Wisconsin, which allowed WakeMed to accelerate the timing of the bond issuance to take advantage of low interest rates. H2C coordinated the financing process and worked alongside WakeMed, underwriters, legal counsel, rating agencies, the issuer, and others to prepare the disclosure document and price and close the Bonds. The entire process took less than three and a half months.

H2C’s advice to the health system resulted in cost savings for WakeMed, less risk in WakeMed’s capital structure, and more flexible bond documents and security provisions. Specifically, WakeMed achieved almost 50 percent savings in letter-of-credit fees and $38 million in cash-flow savings in the next seven years, with only a modest increase in maximum annual debt service. Each of the three series of Bonds has a multimodal bond indenture, which will provide WakeMed with options on the optional redemption or mandatory tender dates of the Bonds. H2C also helped formulate a Springing Master Trust Indenture that modernizes WakeMed’s existing Master Trust Indenture.

“H2C worked with WakeMed to develop a plan of finance and helped us accelerate our time to market by more than six months," said Rick Carrico, CFO, WakeMed. "After development of the plan, H2C led the execution and helped WakeMed achieve its goals.”

“The 2019 financing resulted in a more balanced capital structure while also allowing WakeMed to lock in low fixed rates," said Elaine Yao, Managing Director, H2C. "WakeMed is an integral part of the communities it serves, and the expansion at their Cary hospital will allow the System to grow in a key service area. H2C is honored to serve as WakeMed’s financial advisor.” Email Elaine.