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Hospital is set to take on $47 million in debt
By JEREMY GOLDMEIER, News-Record Writer jgoldmeier@gillettenewsrecord.net
Campbell County Memorial Hospital is set to take on about $47 million in debt to pay for its ongoing facility expansion project.Hospital trustees gathered Wednesday evening to finalize the details for the bonds that would finance the bulk of the $68 million endeavor. The expansion effort will include a new two-story medical wing for surgery space and administrative offices, a 210-space parking garage, a helipad and 35,100 square feet of “major renovation” to the hospital’s existing facilities.
While the bonds won’t be priced until Dec. 15, some preliminary figures prepared by bond underwriter Piper Jaffray give an estimate of what the hospital’s debt picture will look like over the coming decades:
- How much debt? Under the terms of the bonds, the hospital can take on a maximum of $48 million. But hospital chief financial officer Andy Fitzgerald says the final number should be in the range of $47 million.
- How long will it be on the books? As of Wednesday night, trustees were leaning toward a 25-year bond issue, which would carry on until 2034. The average interest rate on the bonds would be 5.64 percent, which is actually lower than it would be if the hospital decided to extend the issue over 30 years. At 25 years, the interest would be about $42.8 million. At 30 years, it’s about $53.3 million.
- Will it affect hospital operations? Fitzgerald says no. Even in a troubled national economy, the hospital has maintained a healthy cash reserve and has been debt-free for several years. The hospital will make an equity contribution of roughly $30 million toward the project’s completion.
But even then, Fitzgerald estimates the hospital will still have more than 200 days worth of cash on hand. To give that number some perspective, the hospital only has to maintain at least 65 days of cash on hand for the duration of the project.
- Will local businesses be able to purchase bonds? The hospital and Piper Jaffray are giving preference to local investors once the bonds go on sale. Investors would receive interest payments for the life of the project.
The bond issue is expected to close Dec. 23.
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