Oconee Regional Medical Center, Ga., solicits consents for 1998 bonds

By Angela McDaniels

Tacoma, Wash., Jan. 22 – Oconee Regional Medical Center of Georgia is soliciting consents from the holders of the series 1998 revenue bonds issued through the Baldwin County Hospital Authority, according to a notice from bond trustee U.S. Bank NA.

Bondholders are being asked to consent to a management services agreement entered into on Oct. 1 between Oconee and Navicent Health under which Navicent would manage the hospital and a separate facility. Under the agreement, Oconee and Navicent would form a joint venture to provide outpatient services in the hospital’s service area with ownership split equally between the two.

The bond trustee said Oconee has experienced “severe financial distress” and its financial reporting reflects “ongoing and material financial losses.”

As proposed, the transactions include the following terms, among others:

• A limited guaranty by Navicent of regularly scheduled debt service on the bonds;

• A $5 million line of credit in favor of Oconee;

• A waiver of existing financial covenant defaults and agreement to waive future financial covenant defaults so long as there is no payment default on the bonds and the limited guaranty remains in force and effect;

• A waiver of the duty to retain a management consultant if there is a failure by the hospital to meet financial covenants so long as there is no payment default on the bonds and the limited guaranty remains in force and effect;

• An agreement that the hospital authority and Oconee will not be required to enter into further amendments to the master indenture or bond indenture;

• Amendment of the bond documents to permit a junior pledge of revenues, which are collateral for the bonds, to Navicent as collateral for the line of credit and other specified obligations under the management services agreement;

• Amendment of the bond documents to permit a junior pledge of other Oconee and hospital authority assets, which are collateral for the bonds, to Navicent as collateral for the line of credit and other specified obligations under the management services agreement; and

• Some enhanced disclosures to bondholders, including monthly financial reporting.

Bondholders who wish to consent must do so prior to Jan. 28.

The transactions are subject to the consent by holders of at least 51% of the outstanding bonds. The trustee said that subject to consent, the transactions may be consummated on or after Jan. 29.

The trustee can be contacted by emailing Steve Hodges at steve.hodges@usbank.com.

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