HomeMy WebLinkAboutA006 - Memo from Mary Greeley dated May 22, 2003 - Overview of Series 2003 Bond Issue a,yb
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C� aMAR Y GREELE Y
)MEDICAL CENTER
To: Mayor Tedesco and Members of Ames City Council
From: Kim Russel, Mary Greeley Medical Center, President and CEO
Brian Dieter, Mary Greeley Medical Center,Vice President and CFO
Date: May 22, 2003
RE: Summary of the Series 2003 Bond Issue
As we indicated during our presentation on Tuesday, May 13, 2003, interest rates are at or near
40-year lows, and Mary Greeley Medical Center is poised to take advantage of this market to
refinance our current outstanding long term debt with a new, fixed-rate, insured issue. This
refinancing will yield significant savings for the Medical Center over the life of the bonds.
While final savings won't be known until the bonds are actually priced, estimates indicate that
the savings will exceed $2,400,000 on a present value basis. The Medical Center has received
the commitment from Ambac, the insurer of the 1992 and 1993 Bonds, that they will provide
municipal bond insurance for the 2003 Series.
The Series 2003 Bonds will be issued in a principal amount not to exceed $37,000,000 (current
estimate approximately $32,000,000). The Series 2003 Bonds will be issued to refinance the
outstanding Series 1992 and 1993 Bonds (the "Refunded Bonds") for debt service savings.
The proceeds of the Series 2003 Bonds, which are expected to be delivered in June, will be
placed into an irrevocable escrow account and will be used to prepay the Refunded Bonds on
their call dates. The Series 2003 Bonds will have a final maturity of 2022, which is the same
as the Refunded Bonds. Proceeds of the Series 2003 Bonds will also be utilized to fund a Debt
Service Reserve Fund and pay costs associated with the issuance of the bonds, including the
bond insurance premium. This transaction will replace all of the Medical Center's long term
bond related debt. The Series 2003 Bonds do not constitute a general obligation of the City of
Ames, and are payable solely from net revenues of the Medical Center, which is exactly the
same basis under which the 1992 and 1993 Bonds were issued.
On behalf of the Medical Center, we respectfully request the approval of the resolution
authorizing the sale and issuance of the Hospital Revenue Refunding Bonds as specified in the
resolutions included.