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.
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ABOUT WAKEMED HEALTH & HOSPITALS
WakeMed, a North Carolina private not-for-profit corporation that opened in 1961, is headquartered in Raleigh, N.C. WakeMed operates a 941-licensed-bed, multi-facility healthcare system serving a market of approximately 1.9 million people in an eight-county region in eastern North Carolina.
The System’s network of healthcare facilities, located throughout Wake and Johnston counties, includes a 567-licensed-bed regional referral center (WakeMed Raleigh Campus) with an adjoining 98-licensed-bed rehabilitation hospital located in Raleigh (WakeMed Rehabilitation Hospital); a 178-licensed-bed, full-service community hospital in Cary (WakeMed Cary Hospital); a 61-licensed-bed hospital in North Raleigh (WakeMed North Hospital); three freestanding emergency departments and diagnostic centers in Apex, Brier Creek, and Garner; and more. WakeMed Raleigh Campus serves as the System’s flagship facility and is the tertiary provider of trauma, cardiac, neonatal intensive care, neurosciences, high-risk maternal, pediatric emergency and intensive care, adult care services, and physical rehabilitation services. WakeMed Raleigh Campus is also home to WakeMed Children’s Hospital.
Through WakeMed Physician Practices, the System employed approximately 334 physicians and 195 advanced practice professionals at more than 80 office sites. The System has a medical staff of more than 1,100 physicians.
WakeMed is committed to improving the health and well-being of its community by providing outstanding and compassionate care to all. 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.
Kelly T. Duong
Hammond Hanlon Camp LLC
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“H2C worked with WakeMed to develop a plan of finance and helped us accelerate our time to market by more than six months."
— Rick Carrico