Case Study

Baptist Health System

In 2004 PFM was hired by Baptist Health System ("BHS") as a part of task force to advise on a restructuring its entire debt portfolio. The heavily frontloaded debt service structure of BHS created cash flow problems over the next several fiscal years. PFM performed a comprehensive analysis of various underwriter restructuring proposals and worked with management to select the structure that most appropriately met the risk profile and the desired cash flow relief for BHS, cognizant of credit rating implications for the proposed plan of finance. During the course of the planning process for the financing BHS underwent several changes to its corporate structure by divesting two of its Hospitals, with two other divestitures planned. In addition BHS had a $118 million capital improvement program planned to improve the existing facilities. The capital improvement program was anticipated to be funded with proceeds of the planned bond issue and divestiture proceeds.

Over several months PFM attended several Board meetings to educate the Board about the proposed financing, while facilitating the conversations with the existing credit enhancer of BHS's debt and rating agencies. BHS ultimately selected to do a traditional uninsured fixed rate financing. In November of 2005 BHS was assigned a "Baa1" rating from Moody's, with its outlook changed to "stable" from "negative", and completed a $290 million fixed rate financing the created over $60 million in cash flow relief over the next several fiscal years and financed $54 million for BHS's capital improvement plan.

Additionally, PFM has served as investment advisor to BHS in the procurement of investment contracts associated with its new money bond proceeds.

Most recently, in early 2007 PFM assisted BHS in a full capital review of the debt profile in evaluating potential future capital financing options as BHS explores its long-range planning.