Case Study

Milford Regional Medical Center

PFM served as financial advisor to Milford Regional Medical Center ("Milford" or "Medical Center") in its $68.4 million Series 2007 new money and refunding bonds. The Medical Center issued new bonds to finance the construction of a cancer center and refunding bonds to advance refund the Series D Bonds.

The project was a strategic priority to the Medical Center's Board of Directors and management team because it brought cancer treatment to a section of Massachusetts that previously was not available. In addition, Milford partnered with a major cancer center and a major Boston hospital to provide the cancer care. Several financing alternatives were explored including a third party ownership and lease structure. We worked with the management team of Milford to determine what the most appropriate financing structure would be for the Medical Center.

Ultimately, Milford issued tax-exempt revenue bonds based on its underlying credit of Baa3 and BBB- by Moody's and Standard & Poor's respectively. The bonds were supported by a mortgage of the main campus as well as the cancer center campus and a general revenue pledge of the Medical Center. Included in the general revenues of Milford are lease payments under a 20-year lease agreement with both institutions that have partnered with Milford. PFM assisted in the negotiation of these leases. The strength of the leases were significant in Milford's ability to achieve rating affirmations in conjunction with this large financing. PFM Asset Management provided investment advice related to the investment of the debt service reserve fund.

In 2002, PFM assisted Milford Regional Medical Center access the capital markets in 2002 for new money financing for its renovation and expansion project. The Medical Center had an underlying rating of "BBB-" and was not able to obtain insurance at attractive terms or covenants. As the pricing approached, Merrill Lynch, the underwriter of the issue, held investor calls to market the bonds and gauge the interest of potential buyers with the proposed security and covenant package. At this point in the transaction, Merrill Lynch has two clients - both the Medical Center and its potential buyers. PFM was able to provide independent advice to the Medical Center as to what was appropriate to offer in terms of covenants that allowed the Medical Center to maximize its buyer base while minimizing onerous covenants.