Correction: Fitch Upgrades Ty Cobb, Georgia's $17.8MM Bonds to 'BB'; Outlook Stable.

NEW YORK -- (This is an erratum of the press release issued yesterday. The total operating revenue referenced in the sixth paragraph does not include the Barrow Hospital.)

Fitch has upgraded the approximately $17.6 million Hospital Authority of the City of Royston, GA revenue anticipation certificates (Ty Cobb Healthcare System, Inc. Project) series 1999 to 'BB' from 'B'. The Rating Outlook is Stable.

The rating upgrade is supported by Ty Cobb's much-improved liquidity position. At the end of fiscal 2005, Ty Cobb had 262.3 days cash on hand ($36.1 million in unrestricted cash -- draft audit), up from 31.4 days ($5.8 million in unrestricted cash) at fiscal 2004. As of March 31, 2006, Ty Cobb reports a total of $34.2 million remains as unrestricted cash. The increase in its liquidity position resulted from the sale of Barrow Hospital to for-profit Health Management Associates, Inc. (rated 'A-' by Fitch) in fiscal 2005. Management, at the direction of the board of directors, fully intends to maintain a significant portion of the sale proceeds in both unrestricted and restricted cash accounts, after retiring short-term debt and investing in some overdue and much-needed capital expenditures. Management is examining various investment allocations and restrictions with its portfolio manager, Morgan Stanley. Ty Cobb's current rating level, and any improvement in the rating, is dependent on maintenance of a strong liquidity position and sustained improvement in operational performance.

Management plans to present a strategic plan to the board of directors in September 2006 which will reaffirm its mission, independence, and commitment to both acute care and long-term care. The plan will also include a five-year capital plan for both acute care and long-term care (which may include a $30 million debt issuance), possible campus/service line consolidations (e.g., OB/GYN at Cobb, surgical at Hart), renewed clinical focus (e.g., OB/GYN, gastroenterology, medicine, psychiatry), revenue cycle enhancements, physician recruitment initiatives, and improved payor strategies, and overall operational improvement initiatives. A board of directors meeting is scheduled to approve the strategic plan as well as any internal restrictions on the Barrow proceeds for the fall of 2006.

Credit concerns include challenges relating to the implementation of the strategic plan, continued physician recruitment issues, poor payor mix and future capital needs. Ty Cobb's turnaround plan hinges on management's ability to implement sustained operational improvements. One of the major components of the turnaround plan at Ty Cobb must address recruitment of physicians in the near-term in order to replace aging physicians, to remain competitive, to expand into different specialties, and to not lose patient volume. Ty Cobb has begun a cash-financed capital project at Hart hospital which will expand the existing facility and improve services and access for patients. Fitch views this project positively, but is concerned about construction costs which are predicted to be $5 million.

The Stable Rating Outlook is based on management's intention to implement an operational turnaround for the system and the improved liquidity position. For fiscal 2006, management is budgeting for a net income of $2.3 million, which Fitch feels is somewhat aggressive.

Ty Cobb Healthcare System consists of two hospitals (153 operated beds) and three long-term care facilities (350 operated beds). The two hospitals capture approximately 65-68% of admissions in the service area. The system had $56.5 million in total operating revenue (excluding Barrow Hospital) in fiscal 2005. Ty Cobb has not entered into any swaps to date, though the board of directors will consider a swap policy at the above-mentioned board meeting. Fitch notes that disclosure to bondholders has improved since Fitch last reviewed the credit. While there is no covenant to do so in their bond documents, management has indicated that it will disclose to the Nationally Recognized Municipal Securities Information Repositories (NRMSIRs) both quarterly and annual audited financial information, which Fitch views positively.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.