Fitch Rates Greater Fairbanks Community Hospital Foundation's 2009B&C Revs 'A'; Outlook StableNEW YORK--(Business Wire)--Fitch Ratings has assigned an unenhanced/underlying rating of 'A' to the approximately $30.3 million of Alaska Industrial Development and Export Authority series 2009B and 2009C revenue refunding bonds issued on behalf of Greater Fairbanks Community Hospital Foundation (GFCHF or the Foundation). Additionally, Fitch affirms the underlying 'A' rating on the outstanding series 2009A and 2004 bonds. The Rating Outlook is Stable.
The obligated group for the financing consists of the Foundation, which owns Fairbanks Memorial Hospital, a 152-bed acute care hospital; Denali Center, a 90-bed skilled nursing facility; and Fairbanks Cancer Treatment Center, all of which are located on the same campus in Fairbanks. Bond proceeds will be used to refinance a draw down on GFCHF's Key Bank line of credit (LOC), fund reimbursement of prior capital expenditures, fund a debt service reserve fund, and to pay costs of issuance. Approximately $16.6 million will be refunded as variable-rate demand obligation bonds with expected support by a direct-pay letter of credit from the Bank of Montreal (rated 'AA-/F1+' by Fitch). Approximately $13.7 million will be issued in a fixed-rate mode.
The rating is supported by Fairbanks Memorial Hospital's (FMH) solid relationship with Banner Health (Banner; rated 'AA-' by Fitch), the terms of the operating lease between Banner and GFCHF, FMH's dominant market position, strong balance sheet of the Foundation, and favorable debt service coverage. Primary concerns include the ability of either party to terminate the lease with a one-year notice, labor risks, slightly declining inpatient volumes, and a high exposure to Medicaid reimbursement.
Total combined, FMH and Denali Center revenues totaled $199.5 million in 2008. The Foundation covenants to provide annual and quarterly disclosure to bondholders, including the financial statements of the Foundation, FMH, and the Denali Center, which is viewed positively.
For more information regarding GFCHF, please refer to Fitch research report dated March 16, 2009 available on Fitch's web site at www.fitchratings.com.
Posted: October 16, 2009
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