UHS after financing for lease

Published 1:29 am Sunday, May 29, 2011

Beaufort County Medical Center in Washington. (WDN Photo/Jonathan Clayborne)

A Greenville-based health-care provider is seeking bond financing while working toward a lease/purchase agreement with Washington’s Beaufort Regional Health System.

University Health Systems of Eastern Carolina has asked the North Carolina Medical Care Commission to issue revenue bonds in an amount not to exceed $50 million, reads a recent legal notice in the Washington Daily News.

The bond proceeds would cover acquisition of land, hospital improvements, medical equipment and other expenditures for facilities under the UHS banner, the notice shows.

Some of the money would be spent on “prepaying the lease payments on a long-term lease with an option to purchase all of the health care buildings, facilities and equipment of” BRHS, the notice reads.

UHS has proposed leasing BRHS for 30 years at $25 million, with an option to buy the property at the end of the lease.

BRHS started seeking lease/purchase or management partners last year largely because of financial constraints.

After a request-for-proposals process, and a public outcry over the selection of a different suitor, UHS emerged as the only candidate in the field.

This winter, the BRHS Board of Commissioners signed a letter of intent with UHS, allowing the Greenville entity to move ahead with its due-diligence process. The process involved the inspection of financial records and BRHS operations.

“Representatives of Beaufort Regional Health System and University Health Systems continue to work diligently and in good-faith to close the transaction in a manner which is intended to ensure the continuity of BRHS’ operations,” reads a statement released Friday by Pam Shadle, spokeswoman for BRHS.

“The Beaufort Health System Project will be leased and operated by the Parent Corporation, East Carolina Health č Beaufort, Inc. or UHS Physicians, LLC,” the legal notice reports, in part.

A public hearing on the bond issue will be conducted at 8 a.m. Thursday in Conference Room 104 of the Brown Building at 801 Biggs Drive, Raleigh.

Roger Robertson, president of East Carolina Health, issued a statement Thursday in response to a Daily News request.

“The June 2 public hearing, sponsored by the North Carolina Medical Care Commission, relates to a $50 million bond issue planned by University Health Systems of Eastern Carolina,” the statement reads. “The purpose of this bond issue is to maintain system cash reserves at an appropriate level as UHS prepares for several capital expenditures, including a proposed lease of Beaufort Regional Health System. The bond issue is not an indication of the progress in ongoing negotiations about the future of Beaufort Regional Health System, although we remain optimistic that an agreement will be reached soon.”

The Medical Care Commission frequently issues revenue bonds for health-care projects throughout the state.

“As of June 30, 2010, the Commission had issued revenue bonds or notes for 379 projects,” reads a report on the N.C. Division of Health Service Regulation’s website.

“The total authorized principal amount of all such financings was $16,362,697,052 and the total outstanding principal amount of all such financings as of June 30, 2010, was $6,989,322,431 excluding financings that have been refunded,” the report continues. “Each issue is payable solely from revenues derived from each corporate entity financed, is separately secured, and is separate and independent from all other series of bonds as to source of payment and security.”

Past bond initiatives included one issued Oct. 1, 1998, for Pitt County Memorial Hospital, the UHS flagship hospital. The authorized principal amount was $84 million, and the principal amount outstanding was $4.91 million as of June 30, 2010.

Dates of issue for other bond initiatives stretch back to the late 1970s, the website notes.

Contributing Writer Betty Mitchell Gray contributed to this story.