District of Columbia Multimodal Revenue Bonds; Medlantic/Helix Issue 1998A, 1998B and 1998C.Business Editors COLUMBIA, Md.--(BUSINESS WIRE)--June 19, 2002 MedStar Health MedStar Health is a $2.9 billion non-profit healthcare organization. It operates 25 businesses, including seven hospitals in the Baltimore-Washington region of the United States. , Inc.: Maryland Health and Higher Educational Facilities Authority Revenue Bonds Medlantic/Helix Issue Series 1998A and 1998B MedStar Health, Inc. (MedStar) is pleased to announce today that the healthcare organization and the issuing authorities executed "Closing Agreements" with the Internal Revenue Service (IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. ) under which the above-referenced bonds (the MedStar Bonds) will continue to be recognized as asset acquisition bonds and not refunding bonds refunding bond A bond that is issued for the purpose of retiring an outstanding bond. Issuers refund bond issues to reduce financing costs, eliminate covenants, and alter maturities. See also crossover refunding bonds, prerefunding. , thereby preserving their tax-exempt status. MedStar chose to resolve the pending IRS examination of the MedStar Bonds under Option 1 of Announcement 2002-43, by paying $500,000 to the IRS. This amount represents 30 percent of the alleged "arbitrage arbitrage: see foreign exchange. arbitrage Business operation involving the purchase of foreign currency, gold, financial securities, or commodities in one market and their almost simultaneous sale in another market, in order to profit from price profit" on the bonds. Neither MedStar nor the issuers are required to take any further action to continue the tax-exempt status of the MedStar Bonds. "Throughout this process our organization believed that we used an appropriate structure regarding the issuance of the bonds," said MedStar Health Executive Vice President and Chief Financial Officer Michael Curran. "We are pleased that the agreement between the IRS and MedStar brings closure to this issue and preserves the tax-exempt status of the bonds." The execution of the Closing Agreements will result in the release to MedStar of the monies held in the special escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. fund that MedStar voluntarily established in December 2000. This escrow provided certain assurances and benefits to prospective purchasers of the MedStar Bonds issued by the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). while the IRS examination was pending to enhance the re-marketing of such bonds at tax-exempt market rates. |
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