A small rural Tennessee hospital has completed its $33 million bond financing, a unique deal in which Columbia/HCA Healthcare Corp. guaranteed $8 million of the 8.55% debt.
Jesse Holman Jones Hospital in Springfield had tried twice to tap the tax-exempt bond market for expansion capital, failing both times (April 4, p. 4).
However, in exchange for the hospital joining Columbia/HCA's three-hospital network in nearby Nashville, Tenn., the nation's largest hospital chain agreed to provide as much as $2 million in working capital and set up a special reserve fund of $8 million. The reserve fund can be used to repay the bonds if there's a shortfall.
The 115-bed hospital will use the bonds to pay for a replacement facility. Construction has started, and the project is slated for completion by the end of 1995.
The backing of Louisville-Ky.-based Columbia/HCA "absolutely" made the difference in getting the deal done, said Jim Forbes, vice president of First Boston Corp., a New York-based investment banking firm. First Boston was the senior manager of the deal; Frazer Lanier Co., Montgomery, Ala., was co-manager.