Prisma Health Series 2018A & 2018B, C, D, E

14 Nov

Case studies

Prisma Health Series 2018A & 2018B, C, D, E

$586,525,000 Series 2018A Tax-Exempt Fixed Rate Bonds
$325,000,000 Series 2018B, C, D, E Tax-Exempt Variable Rate Bonds

About Prisma Health

Prisma Health is the largest healthcare delivery system in South Carolina, with over $4.0 billion of projected annual revenue. Prisma was formed in the coming together of Greenville Health System and Palmetto Health, as well as their ancillary businesses, in November of 2017. Prisma operates 12 hospitals and specialty care facilities, outpatient care sites, ambulatory surgery centers, and physician practices with 1,600 employed physicians. Prisma’s hospitals offer a broad scope of services ranging from acute care to highly specialized tertiary services including children’s hospitals, trauma centers, comprehensive heart care, and cancer care. Prisma Health has a service area of 21 counties in the Upstate and Midlands regions of South Carolina with market share of 59%. With over 2.6 million people in its service area, 50% of South Carolina’s population lives within a short drive of a Prisma facility and Prisma serves nearly a quarter of the statewide population. Ponder has worked with Prisma’s legacy organizations since 2000, and was chosen in a competitive process to serve as financial advisor at the time of the merger.

Focus on Value

Ponder served as financial advisor to Prisma Health for its first public offering as a combined system. The $587 million fixed rate bond issue will be used in conjunction with four series of variable rate bonds (an additional $325 million) to restructure the existing legacy system debt. Ponder worked with Prisma’s team for over a year on the restructuring. Given certain legal and political challenges, Ponder facilitated a bridge loan for Prisma last March. This interim step allowed Prisma to retain the ability to use acquisition financing for its permanent restructuring given the prohibition on advanced refunding, and saved nearly $4.0 million in interest expense to date.

To facilitate the public offering, Ponder worked with Prisma on both its rating agency strategy (which achieved A2/A ratings from both Moody’s and S&P) and its investor presentation which was viewed by over 50 investors. Despite more challenging market conditions, Ponder worked closely with the underwriters to structure the financing and achieve an attractive cost of funds at 4.5%. Ponder also formulated an attractive variable rate portfolio, which will diversify Prisma’s risk among products, tenors and banks, as well as significantly lower its variable rate cost of funds.

Pricing Results:

Credit Ratings: A2/A

Comparable Bond Sales:

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