Fitch Dwngrs MedStar's -MD- $584MM Bonds To `BBB'; Rts Ser 2001 `BBB'.Business Editors & Health/Medical Writers NEW YORK--(BUSINESS WIRE)--April 18, 2001 Fitch has assigned a 'BBB' rating to the District of Columbia's $50,000,000 series 2001A multimodal Two or more modes of operation. The term is used to refer to a myriad of functions and conditions in which two or more different methods, processes or forms of delivery are used. On the Web, it refers to asking for something one way and receiving the answer another; for example requesting revenue bonds, $50,000,000 series 2001B multimodal revenue bonds, and $50,000,000 series 2001C multimodal revenue bonds, all issued on behalf of MedStar Health Inc. (MedStar). Proceeds of the series 2001 debt will be used to refinance the June 2000 bridge loan used to acquire Georgetown University Hospital Georgetown University Hospital was founded in 1898 as part of Georgetown University, a Catholic, Jesuit University in the Georgetown neighborhood of (GUH GUH Georgetown University Hospital (Washington, DC) ), fund capital expenditures at GUH and MedStar's Washington D.C. hospitals and pay costs of issuance. The bonds are currently expected to sell the week of May 7 through negotiation by Banc of America Securities LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . In addition Fitch has downgraded from 'BBB+' to 'BBB' the underlying rating on approximately $584 million of MedStar Health Inc.'s (MedStar) bonds (listed below). The outstanding bonds are insured by Financial Security Assurance Inc. and Ambac Assurance Corp., whose insurer financial strength ratings are both rated 'AAA' by Fitch. The downgrade reflects the continued concern over the successful integration of GUH into the system, a significant decline in unrestricted liquidity since fiscal year 1999, and Fitch's belief that MedStar will fail to meet budgeted goals in 2001. Through six months ended Dec. 31, 2000, GUH's operating performance has fallen short of budgeted goals by approximately $7 million, due to lower than expected volumes and increased expenses associated with recruitment efforts. In addition MedStar's unrestricted liquidity since fiscal year 1999 declined $169 million from a peak of $662 million (169 days cash on hand (DCOH DCOH Dimerization Cofactor of HNF1 )) at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 1999, to $493 million (100 DCOH) at six months ended Dec. 31, 2000. Some of the decline in the last six months can be attributed to an increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying at Washington Hospital Center Washington Hospital Center Washington Hospital Center is the largest private hospital in Washington, D.C.. A member of MedStar Health, the not-for-profit Hospital Center is licensed for 926 beds and, on average, operates near capacity. (WHC WHC World Heritage Centre WHC World Heritage Committee WHC World Heritage Convention WHC Washington Hospital Center WHC Wildlife Habitat Council (Silver Spring, MD) WHC Wildlife Habitat Canada ). Fitch notes that unrestricted liquidity at Dec. 31, 2000, includes $124 million currently collateralized for the 2000 bridge loan but does not include approximately $38 million that is currently restricted as a result of a springing debt service reserve that resulted from non-compliance with certain loan agreements, due to the effects of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in fiscal year 2000. It is expected that these funds will be restored to unrestricted cash at the end of this fiscal year. Through six months MedStar has posted an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $43 million, and a bottom line loss of $20.5 million. This financial performance reflects a $14.6 million operating loss at GUH as well as an eight-week nurse's strike ($23.5 million) at the Washington Hospital Center. Based on these results Fitch expects MedStar to fall short of its budgeted 2001 year end goals which indicate an operating loss of $55.6 million and a bottom line loss of $7.9 million. Fitch's outlook for MedStar is uncertain. Key strengths are the stronger than anticipated performance of MedStar's Baltimore hospitals, and its status as the leading provider in the Baltimore Washington Corridor. Through six months ended Dec. 31, 2000, all of MedStar's Baltimore hospitals have exceeded budgeted expectations in volume and financial performance, offsetting some of the losses from Georgetown and WHC. Also, despite the nursing strike at WHC, volume at this hospital remains strong and ahead of budgeted expectation. Nonetheless, Fitch believes the importance of the successful turnaround of GUH is central to MedStar's long term success. Fitch believes the next eighteen months will be a critical period for MedStar. The successful integration of Georgetown into the system including the achievement of targeted volume levels will be management's biggest test. As this occurs, Fitch expects MedStar to improve its operating performance while maintaining cash levels consistent with its rating level. MedStar Health is a large, integrated health care integrated health care, n healthcare services combining the best of conventional and complementary health care. system composed of seven hospitals (two in Washington D.C. and five in Baltimore) with a total of 3,090 staffed beds, two long term care facilities, three freestanding ambulatory surgery centers and several other health care related organizations. Outstanding Debt -- $300,000,000 District of Columbia (DC), (Medlantic/Helix) multi-modal revenue bonds series 1998A, 1998B, and 1998C (insured: FSA) downgraded from 'BBB+' to 'BBB'; -- $166,605,000 Maryland Health and Educational Facilities Authority (MD), (Medlantic/Helix) revenue bonds series 1998A (insured: FSA) downgraded from 'BBB+' to 'BBB'; -- $116,910,000 Maryland Health and Educational Facilities Authority (MD), (Medlantic/Helix) revenue bonds series 1998A (insured: AMBAC) downgraded from 'BBB+' to 'BBB'. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion