CUSIP 415221AV2

  • ISIN: US415221AV22
  • Entity Name: Harrison County Health Facilities Development Corporation
  • Sector: Municipal Agency
  • Announcement Date: 16-Sep-2016
  • Effective Date: *****
  • Issue Date: *****
  • Maturity Date: 01-Jul-2020
  • Country of Issuer: United States
  • Region: N.Amer
  • Issue Currency: United States of America Dollars
  • CA Type: Covenant Breach
  • News: Good Shepherd Health System, Inc. (GSHS) management out of an abundance of caution is reaching out to certain of the holders of the Gregg County Health Facilities Development Corporation Hospital Revenue Refunding Bonds (Good Shepherd Health System Obligated Group) Series 2015A (the Series 2015 Bonds) in order to obtain majority approval for a waiver relating to its September 30, 2016, testing date for its (i) days cash on hand (the Liquidity Covenant), (ii) ratio of available revenues to average annual debt service requirements (Debt Service Coverage Covenant) and (iii) long term debt to total capitalization covenant (the Debt to Cap Covenant, and together with the Liquidity Covenant and Debt Service Coverage Covenant, the Covenants). The Covenants, which were agreed to by GSHS in connection with the issuance of the Series 2015 Bonds only require (i) 90 days cash on hand, which is tested semi-annually on March 31st and September 30th of each year, (ii) that available revenues be at least 125% of average annual debt service requirements for each fiscal quarter, and (iii) a long term debt to total capitalization ratio below 0:60:1:00, which is tested at the end of each fiscal quarter. Due to (i) a potential delay of the Texas Medicaid Waiver of Uncompensated Care payment of approximately $8,400,000 currently scheduled to be paid September 30, 2016, (ii) September being a three payroll month, and (iii) the recent decreases in patient volume driven by the decline in the East Texas economy due in part to the oil and gas industry, it is possible that GSHS may not meet one or more of the Covenants for September 30, 2016. In addition, GSHS is transitioning revenue cycle services to a third party company with a national footprint and demonstrated expertise in improving hospital revenue cycle performance. This transition will take four to six months to complete and could result in a temporary reduction in collections and additional accounts receivable reserves, which would negatively impact the covenant calculations until the transition to the third party is complete. Therefore, GSHS management believes it is prudent to seek such waivers so its focus can remain unencumbered on the closing of its strategic acquisition by Duke LifePoint Healthcare. GSHS currently anticipates entering into a definitive agreement to be acquired by Duke LifePoint Healthcare in the next 30 days and completing the transaction by the end of the 2016 calendar year, subject to the completion of legal and financial due diligence and state and federal regulatory reviews. However, GSHS can neither guarantee that execution of such definitive agreement will occur, nor that the transaction will close by year end or at all.
  • Description: Municipal Name: Harrison County Health Facilities Development Corporation CUSIP: 415221AV2 Currency: USD Harrison County Health Facilities Development Corporation announced today that the trustees has failed to maintain the average annual debt service coverage ratio equal to at least 125% at the end of the fiscal year quarter, thereby violating the covenant for the Series 2010 Hospital Revenue Bonds.
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