HUMC Update - Payments Upon Sale or Closure
Recent Renovation Progress at the HUMC's Emergency Room Here is some information on the HUMC for those who are concerned about the Hospitals fiscal health and do not want to accept blanket statements from politicians as to what is going on. Scott Siegel sent this to me and it shows a difference in the Payments Upon Sale or Closure from 2007 to 2008.
From 2007 Prospectus - Payments Upon Sale or ClosureAs described above under the heading “THE FACILITIES”, the Authority is acquiring certain assets, including the main Hospital campus and two additional buildings, from Bon Secours. As a condition to such acquisition, the Asset Transfer Agreement provides that, if during the eight year period following the date of delivery of the Series 2007 Bonds the Hospital is closed for any reason and the main Hospital campus and/or the parking garage attached to the main Hospital campus (which garage is owned by the City and was previously leased to Bon Secours) is sold, conveyed or otherwise transferred to a third party or is used by the Authority or the Manager for purposes other than the provision of heath care services to a broad spectrum of the communities served by the Hospital, then in either such event the Authority shall be required to pay to Bon Secours an amount calculated as provided in the Asset Transfer Agreement (the “Payment Upon Sale or Closure”). The Payment Upon Sale or Closure is computed generally with reference to a percentage of the “net proceeds” or “net appraised value” of the property, after first deducting, inter alia, any unpaid and outstanding indebtedness incurred by the Authority as evidenced by Bonds (including the Series 2007 Bonds) and any amounts paid by the City pursuant to the City Guaranty.
In the event of a closure of the main Hospital campus and/or the attached parking garage which does not take place in conjunction with a sale thereof, the Authority will be required to make a payment to Bon Secours in an amount equal to a portion of the net appraised value thereof. There can be no assurance that funds available to the Authority will, after making any such required payment to Bon Secours, be sufficient to pay debt service on the Series 2007 Bonds. In such event, and in the absence of continuing Revenues from the operation of the Hospital, recourse to the City Guaranty will likely be required in order to pay principal of and interest on the remaining Series 2007 Bonds.
From 2008 Prospectus - Payments Upon Sale or Closure
As described above under the heading “THE FACILITIES”, the Authority acquired certain assets, including the main Hospital campus and two additional buildings, from Bon Secours. As a condition to such acquisition, the Asset Transfer Agreement provides that, if during the two year period following the purchase of the Hospital facilities (i.e. January 31, 2009), the Hospital is closed for any reason and the Hospital is sold, conveyed or otherwise transferred to a third party or is used by the Authority or the Manager for purposes other than the provision of heath care services to a broad spectrum of the communities served by the Hospital, then in either such event the Authority shall be required to pay to Bon Secours an amount calculated as provided in the Asset Transfer Agreement (the “Payment Upon Sale or Closure”). The Payment Upon Sale or Closure is computed generally with reference to a percentage of the “net proceeds” or “net appraised value” of the property, after first deducting, inter alia, any unpaid and outstanding indebtedness incurred by the Authority as evidenced by Bonds (including the Series 2008 Bond) and any amounts paid by the City pursuant to the City Guaranty. In the event of a closure of the main Hospital campus in an amount less than the Outstanding principal of and interest on the Outstanding Bonds, and in the absence of continuing Revenues from the operation of the Hospital, recourse to the City Guaranty will likely be required in order to pay principal of and interest on the remaining Outstanding Bonds of the Authority.
Scott Siegel simply asks why did the period upon closure in the prospectus go from 8 years in 2007 to 2 years in 2008? Not necessarily anything untoward mind you just another one of those things that make you go hmmm.... ◦
