Maine Medical Center $36.735 Million Bank Direct Purchase Financing
August 1, 2018
Cain Brothers, a division of KeyBanc Capital Markets (“Cain Brothers”), served as the sole Arranger in the issuance of $36.735 million of Series 2018C tax-exempt Bank Direct Purchase Bonds for Maine Medical Center (“MMC”). The 2018C Bonds were issued through the conduit Maine Health and Higher Educational Facilities Authority.
Proceeds from the 2018C Bonds were used to refinance $47.54 million of MMC’s Series 2008A variable rate demand bonds (“VRDB”) that were secured by a letter-of-credit. The existing 2008A VRDB Bonds featured indentured fund balances (including a debt service reserve fund) that were producing negative arbitrage. By refinancing the bonds into a Bank Direct Purchase structure, MMC was able to release $11.55 million of indentured funds to reduce debt outstanding and release an additional $1.4 million as unrestricted capital to its balance sheet.
Additionally, Cain Brothers assisted MMC in risk mitigation as the Bank Direct Purchase structure eliminates bank credit risk, basis risk and remarketing risk that were associated with the VRDB structure. Cain Brothers’ competitive bid process resulted in a very attractive 15-year Bank Direct Purchase proposal, far extending the renewal terms of a letter-of-credit structure.
The legacy interest rate swaps that hedged the 2008A Bonds will remain in the place as Cain Brothers served as MMC’s Swap Advisor to properly amend and document the legacy swaps with the 2018C Bonds to ensure continued integration for tax purposes.
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