Fitch IBCA Rates Halifax Comm Hlth Sys FL $18M Bonds 'BBB-'.

NEW YORK--(BUSINESS WIRE)--Oct. 28, 1999--

Halifax Hospital Medical Center Health Care Facilities' $18 million revenue bonds, 1999 series A, issued on behalf of Halifax Community Health System (Halifax), is rated `BBB-' by Fitch IBCA. In addition, Halifax's outstanding parity issues of approximately $106 million in tax-exempt revenue bonds (listed below) are rated `BBB-'. Fitch IBCA was not asked to rate Halifax's non-parity outstanding issues totaling approximately $32 million, but included these obligations in its credit analysis. The bonds are scheduled to be sold through negotiation during the week of Nov. 1 by senior underwriter Salomon Smith Barney, Inc. Proceeds from the series 1999 bonds will be used to used to acquire Columbia Medical Center-Daytona, located across the street from Halifax, from Columbia/HCA ($10.8 million), provide for one year of interest payments ($1.2 million), reimburse for past and future capital expenditures ($3.1 million) and to pay costs of issuance and other acquisition-related costs.

Supported by a highly favorable operating position featuring limited competition, a growing consumer base, and a full-array of tertiary and acute care services in attractive facilities, Halifax Community Health System is well positioned to improve its disappointing financial performance. Fitch IBCA's rating is predicated on the belief that management has made effective corrections in two key areas which will, combined with strong market conditions, improve Halifax's financial indicators to the level of its rating position within two to three years. Fitch IBCA believes that problems in two areas-- mismanagement of patient accounting and the signing of unprofitable managed care contracts--significantly contributed to negative bottom-line operating margins and weak liquidity. While Fitch IBCA believes management should have identified and corrected these problems earlier, it has implemented recent organizational changes that have produced early positive results. Furthermore, management has developed a strategy to divest itself of non-core business lines, which has manifested in the sale of a skilled nursing facility and the closing of a hospital- based skilled nursing facility, as well as the closing and consolidation of patient services at one of its outpatient clinics. Management is committed to reviewing each of its ancillary business lines and divesting or closing any that are expected to result in future operating losses. Fitch IBCA views positively this philosophy, which will enable the organization to focus on the operating improvement of its core business of patient care delivery services.

With a dominant 69% market share position in its taxing district and the ability to collect additional tax revenue if necessary, Halifax is in a strong position to significantly improve its financial performance in the near term.

Halifax, located in Daytona Beach, FL, is an integrated delivery network anchored by its flagship 575-licensed bed tertiary and acute care hospital, Halifax Hospital Medical Center. The system includes a 55,000-subscriber health maintenance organization, and will include a 214-licensed bed acute care hospital after the series 1999 bond issue.

Outstanding Issues:

-- $4,445,000 Halifax Hospital revenue note, series 1998 series A;

-- $26,160,000 Halifax Hospital Medical Center revenue and

improvement bonds, 1997 series A;

-- $26,705,000 Halifax Hospital Medical Center health care

facilities revenue bonds, 1995 series A;

-- $40,300,000 Halifax Hospital Medical Center health care

facilities revenue bonds, 1994 series A; and

-- $8,335,000 Halifax Hospital Medical Center health care facilities

revenue bonds, 1993 series A.