Hamilton Memorial Hospital District, located in Southern Illinois, recently obtained $21 million in direct funding with the assistance of Lancaster Pollard, a national investment banking and mortgage banking firm headquartered in Columbus, Ohio. The financing was led by Steve Kennedy, senior vice president and regional manager.
The district operates a 25-bed critical access hospital in the town of McLeansboro, providing health care services to the residents of Hamilton County and neighboring communities. In 2007, the hospital funded a renovation of its facilities through a letter of credit enhanced tax-exempt bond issue. The letter of credit provider was later acquired by a foreign-based bank, contributing to the inability to extend the letter of credit term and necessitating the hospital to address a looming bank term expiration.
The hospital engaged Lancaster Pollard to restructure its existing indebtedness. After actively exploring private sector and agency funding alternatives, Lancaster Pollard negotiated a fixed rate purchase with a regional Illinois-based bank. The structure not only enabled the hospital to secure a low cost of capital and long amortization, but also enabled the hospital's community bank to remain a participant in the debt financing.
"The restructuring allowed Hamilton Memorial to remove the risks associated with its previous debt structure and retain the flexibility for more long-term financing at an appropriate time in the future," Kennedy said. "It's important for rural hospitals like Hamilton Memorial to modernize and stay financially competitive in their markets by finding the lowest cost of capital possible."
The refunding consisted of tax-exempt, fixed-rate bonds privately placed with two commercial banks for a five-year term and a 25-year amortization. The interest rate was under 5 percent. The proceeds were used pay off the 2007 bonds, an existing interest rate swap and closing costs.
"The restructuring was very beneficial to the hospital as it allowed us to refund our debt on the best terms possible," said Randy Dauby, CEO of Hamilton Memorial Hospital. "The bonds were purchased by a bank team that included our local bank and a reputable regional bank, with which we had not previously had a relationship. The participants in the transaction were a good fit for our needs as a critical access hospital."
Hamilton Memorial Hospital District has provided health care to McLeansboro and the surrounding area since 1960. Its inpatient and out-patient services include: laboratory, surgery, respiratory therapy, physical therapy, radiology, social services and education programs.
Lancaster Pollard helps health care, senior living and affordable housing organizations expand and improve their services by providing financing solutions. The firm offers a full range of investment banking, mortgage banking and investment advisory services and has one of the largest groups of financial professionals dedicated to health care in the country.
For more information about the Hamilton Memorial Hospital District's and other health care financings, visit www.lancasterpollard.com/hospital-financing.aspx.