Prager served as direct placement agent on the $33.5 million Series 2014 issue for Southampton Hospital Association, an acute care hospital in Southampton, New York. The transaction combined a current refunding of outstanding Series 1999A and 1999B bonds, which had interest rates of 7.25 percent and 7.625 percent, respectively. The transaction resulted in $8.139 million in net present value debt service savings, or 25.19 percent savings of the refunded par amount. In addition, Southampton Hospital was able to release debt service reserve funds related to the prior bonds in order to decrease the total amount of debt related to that series. As part of the transaction, the Hospital also issued $4.08 million in new money debt to fund various capital projects.
As direct placement agent, Prager ran a competitive RFP process to find the right banking partner for the Hospital. Through this process, Prager was able to place the full $33.5 million of Series 2014 bonds with a single buyer at a fixed rate of 3.50 percent over a 15-year term. After the 15-year term, the bonds will be fully amortized and Southampton Hospital will have introduced no refinancing risk as part of this transaction. In addition, the Firm was able to negotiate with the Bank to obtain a 3-year, interest-only period for the bonds, resulting in upfront savings of over $2 million throughout the first three years of the Series 2014 bonds.
Robert Chaloner, President and CEO of Southampton Hospital, says of the transaction:
“This refinancing represents a major accomplishment for our community hospital as it will significantly reduce our operating costs at a time when all healthcare facilities are struggling to find additional savings opportunities. It will significantly improve our cash flow and allow us to continue to build stronger clinical programs for the communities we serve. We are very grateful to the entire team at the Bank and Prager for their terrific work in making this happen!”