HJ Sims Executes Complex $132.4 Million Obligated Group Financing for Benedictine
FAIRFIELD, Conn., Sept. 16, 2021 /PRNewswire/ -- HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful closing of a July refinancing for $132,405,000 for Benedictine Health System (Benedictine), a MN nonprofit, Catholic healthcare system providing long-term care services, congregate housing, assisted living, rehabilitation, healthcare and social services.
Historically, most of Benedictine's affiliates were financed on a standalone basis, resulting in 36 series of outstanding debt for 19 different borrowers. The various series of debt were held by eight different banks or servicers with inconsistent terms, covenants, and reporting requirements. Benedictine's board and executive leadership team sought to actualize a capital framework to ensure growth, transformation of service mix, and reinvestment in existing campuses. In August of 2020, Sims was engaged to spearhead this project.
Sims constructed an initial Obligated Group providing the foundation for Benedictine to realize its finance goals. Sims created and utilized a multi-faceted decision matrix that considered factors specific to each affiliate and its outstanding debt. Twenty-one senior living communities, 14 in MN and seven in ND, were selected for the Obligated Group.
Sims focused on finalizing key provisions for the Master Trust Indenture to give Benedictine's organizational and capital structure future flexibility. Sims determined the appropriate debt structure. Because most of the existing debt was bank debt, a shorter 20-year amortization was selected to avoid an extension of the debt's weighted average maturity. Taxable debt was selected to refinance the debt allocable to the ND communities to avoid using two issuers and to give Benedictine the flexibility of debt repayment. Sims worked with bond counsel to secure host approval and execute joint powers agreements among 20 municipalities or issuers throughout MN.
Sims solicited a broad group of commercial lenders to obtain term sheets for the taxable and tax-exempt debt. Sims requested that proposing lenders agree to the same terms as prospective bondholders eliminating the need for a separate financing agreement. Sims required that proposing lenders underwrite the loan such that the real estate was secured as an abundance of caution, and appraisals and LTV requirements would not apply. Sims and Benedictine ultimately chose to work with two lenders with whom Benedictine had longstanding relationships.
While working on the bank debt, Sims distributed long term fixed-rate bonds to the public market. Although the Obligated Group was not qualified for an investment grade rating, Sims ensured that the underlying credit strength of the operations was understood by investors. Along with strong retail participation from Sims wealth management clients, the bonds resulted in oversubscription and repricing of the bonds below expectations. Benedictine achieved a nominal amount of net present value savings and reduced its average coupon from 3.80% to 3.50%. The financing enabled Benedictine to borrow an additional $10M for routine capital expenditures across its campuses. Even with debt increase annual debt service decreased $2.0M+ facilitated by structuring the debt for level debt service. By borrowing at low rates for capital expenditures that would have been funded by operating cash, Benedictine will be in a better position to build its liquidity in the future.
Financed Right® Solutions—Lynn Daly: 312-505-5688 | [email protected] or Kerry Moynihan: 407-313-1702 | [email protected]
ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, Sims has nationwide investment banking, private wealth management and trading locations. Member FINRA, SIPC. Past performance is no guarantee of future results. Facebook, LinkedIn, Twitter, Instagram.
CONTACT: Tara Perkins, AVP | 203-418-9049 | [email protected]
SOURCE HJ Sims
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