Hammond Hanlon Camp LLC Advises Nebraska Medicine on $284 Million Bond Financing
posted on October 11, 2016

 

CHICAGO — Hammond Hanlon Camp LLC ("H2C"), a healthcare-focused investment banking firm, served as the exclusive financial advisor to Nebraska Medicine in connection with the issuance of Nebraska Medicine’s $284 million Health Facilities Revenue Bonds, Series 2016.

 

Prior to the issuance of the Series 2016 Bonds, Nebraska Medicine had not issued new debt in the public markets since 2003.  However, in recent years Nebraska Medicine has undertaken a number of strategic initiatives that required significant capital spending to position itself as a leading academic medical center in the country, including the acquisition of UNMC Physicians, the development of the Fred & Pamela Buffett Cancer Center (the largest project ever on the Nebraska Medical Center / UNMC campus), the purchase of the Bellevue Medical Center hospital facility from its previous owner, and a major investment in an EPIC electronic medical record system.

 

As Financial Advisor, H2C worked closely with the leadership of Nebraska Medicine to evaluate potential financing alternatives for the health system, and developed a comprehensive plan of finance to fund or reimburse: 1) the purchase of Bellevue Medical Center; 2) construction costs for two large outpatient facilities; 3) equipment costs for the Fred & Pamela Buffett Cancer Center; 4) a new parking garage; and 5) a refinancing of short-term capital leases.  H2C also managed the rating agency process, working with the Nebraska Medicine team to develop a credit presentation that highlighted the health system’s key strengths – its essentiality to the state of Nebraska as the leading provider of tertiary and quaternary services in the state, the benefits of its long-term relationship with the University of Nebraska and UNMC, and its positive trends in clinical quality, utilization and financial performance – which earned AA- ratings from S&P and Fitch.

 

“From the moment H2C joined our efforts, they have truly added tremendous value, guidance and experience to our work, and the major decisions that have been before us over the past year,” said Stephanie Daubert, Nebraska Medicine’s CFO.  “We appreciate H2C’s time and commitment to Nebraska Medicine and look forward to their continuing involvement with financing our strategic initiatives.”

 

In addition, H2C managed the banker selection process, and worked actively with the banking team through the bond pricing, which included evaluation of several scenarios involving different couponing and maturity structures. Prior to pricing, Nebraska Medicine determined that its key goal was achieving the lowest possible yield-to-maturity.  On the day of pricing, Nebraska Medicine sold $284 million in bonds with a final maturity of 35 years, including a number of long-dated term bonds with coupons of 3% and 4% for an all-in-cost of 3.20%.  At closing, Nebraska Medicine was able to reimburse itself immediately for almost $100 million for previous capital spending, increasing unrestricted liquidity from approximately 100 days cash on hand to over 130 days cash on hand.

 

“This bond financing represents the culmination of a significant effort over multiple years for Nebraska Medicine,” said Phil Kaplan, Managing Director at H2C.  “It is an honor to work with an academic medical center with such a prestigious reputation.  We are excited for Nebraska Medicine as it has positioned itself to take advantage of future growth opportunities and will continue to excel at providing cutting edge medicine.”   Email Phil