Henry Ford Refinances Health System Debt in Historic Transaction

DETROIT, Sept. 15, 2016 /PRNewswire/ -- In an historic transaction that took place this week, Henry Ford Health System successfully restructured all of its existing debt. The pricing of the system bonds set off a flood of orders totaling $3.6 billion, with a final sale of $1 billion in bonds. It's the largest healthcare tax exempt bond issue in Michigan in the last 25 years, and, likely the largest in the state's history.

"We had more than 60 funds put in orders for bonds," says Wright Lassiter, III, Henry Ford Health System president. "Not only is this a huge validation of the success we've earned with our most recent growth initiatives and improvements to operating performance, it's also a wonderful display of trust in our future to serve the people of southeast Michigan and beyond."

Henry Ford is expected to gain more than $125 million in present value savings and a reduction of more than $10 million in annual interest expense from this transaction. The bond issue was used to refinance Henry Ford's existing debt, and did not include any "new money" financing.  The interest rate on Henry Ford's new 30 year bonds is 3.7%, with an average total interest cost across all bonds of 3.5%. The bond issue generated $1 billion of proceeds including $853 million of bond par amount, $113 million of bond premium and $38 million of taxable debt.

Ed Chadwick, Executive Vice President and Chief Financial Officer for Henry Ford Health System, says the bond issue has allowed Henry Ford to completely restructure all system debt, including the debt from its newest member, Henry Ford Allegiance Health. "We are very pleased with the success of this bond transaction. After this bond issue almost all of our debt will be low cost fixed rate, which provides permanent interest savings, reduced liquidity risk and substantial flexibility for future financings. The substantial interest savings will allow us to continue to better serve our communities."

Two weeks prior to the bond issue, Standard & Poor's upgraded Henry Ford's bond rating to 'A' with stable outlook, and Moody's maintained the system's 'A3' rating, upgrading the outlook from stable to positive. Both investors' groups cited Henry Ford's significant improvement and sustained fiscal operations from 2015 into 2016; an expanding footprint marked by finalized deals with Allegiance Health in Jackson, MI, and HealthPlus in Flint merging into Henry Ford; and the system's unique, fully integrated provider and health plan model.

About Henry Ford Health System

Henry Ford Health System is a six-hospital system headquartered in Detroit, Michigan. It is one of the nation's leading comprehensive, integrated health systems, recognized for clinical excellence and innovation. Henry Ford Health System provides both health insurance and health care delivery, including acute, specialty, primary and preventive care services backed by excellence in research and education. The system is a 2011 Malcolm Baldrige National Quality Award recipient. Visit henryford.com to learn more.

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SOURCE Henry Ford Health System

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