Staff recommends approval of a Resolution authorizing amendment of the supplemental indenture relating to the Bonds issued in 2006 for Leesburg Regional Medical Center, and a Remarketing Circular to be used in connection with the remarketing of the Bonds in order to accommodate the substitution of the Scotia Bank letter of credit for a standby bond purchase agreement.
In 2006 the City issued its Hospital Revenue Bonds (The Villages Regional Hospital Project), Series 2006 (the "Bonds") for the benefit of Leesburg Regional Medical Center, Inc., LRMC Home Health Services, Inc. and The Villages Tri-County Medical Center, Inc., as the members of a Restricted Group. The Restricted Group is required to pay debt service on the Bonds. The Bonds bear interest at a weekly floating rate and are currently secured by a bond insurance policy issued by Radian Asset Assurance, Inc., with liquidity support provided by a Standby Bond Purchase Agreement with Scotia Bank. Because of credit issues relating to Radian, the floating rate on the Bonds has been higher than the floating rates on bonds secured by other credit providers. The Restricted Group proposes to increase the credit support for the Bonds by substituting a direct pay letter of credit issued by Scotia Bank for the current standby bond purchase agreement and thereby lower the borrowing costs associated with the Bonds. To accommodate the substitution of the letter of credit, it will be necessary to amend the supplemental indenture pursuant to which the Bonds were issued. The substitution of the letter of credit will also result in a mandatory tender and remarketing of the Bonds. The Restricted Group requests that the City adopt a resolution approving amendment of the supplemental indenture relating to the Bonds and a Remarketing Circular to be used in connection with the remarketing of the Bonds in order to accommodate the substitution of the Scotia Bank letter of credit. Please note that the backup materials included along with the Resolution are in draft form and may be subject to change; however no changes made would alter the effect of the transaction from the City’s perspective.
1. Approve the Resolution as submitted,
2. reject the Resolution, or
3. such other action as the Commission deems appropriate.
The City is only a facilitator for these bonds and approval of the Resolution, along with the remarketing and the substitution of the letter of credit for the standby purchase agreement, will have no fiscal impact on the City. The request is solely to benefit the Restricted Group (i.e. LRMC) by lowering its borrowing costs related to these bonds.
Department: ___City Attorney
Prepared by: ____Fred A. Morrison
Attachments: Yes____ No __X___
Advertised: ____Not Required ______
Reviewed by: Dept. Head ________
Finance Dept. __________________
Deputy C.M. ___________________
City Manager ___________________
Account No. _________________
Project No. ___________________
WF No. ______________________
A RESOLUTION OF THE CITY OF LEESBURG, FLORIDA APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF A FIRST SUPPLEMENT TO EIGHTH SUPPLEMENTAL INDENTURE TO PROVIDE FOR THE SUBSTITUTION OF A DIRECT PAY LETTER OF CREDIT AS AN ALTERNATE LIQUIDITY FACILITY WITH RESPECT TO THE OUTSTANDING CITY OF LEESBURG, FLORIDA HOSPITAL REVENUE BONDS (THE VILLAGES REGIONAL HOSPITAL PROJECT), SERIES 2006; APPROVING THE FORM AND AUTHORIZING A REMARKETING CIRCULAR; PROVIDING CERTAIN AUTHORIZATIONS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of Leesburg, Florida (the "Issuer") previously issued its $75,000,000 City of Leesburg, Florida Hospital Revenue Bonds (The Villages Regional Hospital Project), Series 2006 (the "2006 Bonds") pursuant to the Indenture of Trust dated as of June 1, 1988 between the Issuer and The Bank of New York, as Trustee (the "Trustee"), as supplemented and amended, including as specifically supplemented and amended by the Eighth Supplemental Trust Indenture (the "Eighth Supplemental Indenture") dated as of January 1, 2006 (the "Indenture") and loaned the proceeds thereof to Leesburg Regional Medical Center, Inc. ("LRMC"), LRMC Home Health Services, Inc. and The Villages Tri-County Medical Center, Inc. ("TVRM"), as the Restricted Group under the Financing Agreement dated as of June 1, 1988 between the Issuer and the Restricted Group, as supplemented and amended, including, as particularly supplemented and amended by the Ninth Supplemental Financing Agreement dated as of January 1, 2006 between the Issuer and the Restricted Group (the "Financing Agreement"); and
WHEREAS, the Restricted Group is obligated to make debt service payments under the Financing Agreement sufficient to debt service on the 2006 Bonds; and
WHEREAS, to provide liquidity and additional credit support for the 2006 Bonds and thereby lower the cost of borrowing for the Restricted Group associated with the 2006 Bonds, the Restricted Group desires to arrange for the provision by The Bank of Nova Scotia, acting through its New York Branch, (the "Bank") of its direct pay letter of credit (the "Letter of Credit") securing the 2006 Bonds in substitution of the Standby Bond Purchase Agreement originally entered into between the Restricted Group and the Bank providing liquidity support for the 2006 Bonds;
NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Leesburg, Florida as follows:
This Resolution is adopted pursuant to the Constitution of the State of Florida, Chapter 166, Florida Statutes, Part II of Chapter 159, Florida Statutes, and other applicable provisions of law.
All terms used herein in capitalized form and not otherwise defined shall have the meanings ascribed to them by the Eighth Supplemental Indenture.
To implement the substitution of the Letter of Credit as an Alternate Liquidity Facility under the Eighth Supplemental Indenture, the First Supplement to Eighth Supplemental Indenture to be entered into between the Issuer and the Trustee (the "First Supplement") is hereby authorized and approved. The form of the First Supplement attached hereto as Exhibit "A" is hereby approved, subject to such changes, insertions and omissions and such filling of blanks therein as may be approved by either of the officers of the Issuer executing the same, execution thereof to be conclusive evidence of such approval.
The Mayor or Mayor Pro Tem of the Issuer and the City Clerk or Assistant City Clerk of the Issuer, or their duly authorized alternate officials, are hereby authorized and empowered to execute and deliver the First Supplement on behalf of the Issuer, in substantially the form attached hereto, subject to such revisions as are authorized hereby.
To provide disclosure to potential investors in connection with the remarketing of the 2006 Bonds upon the substitution of the Letter of Credit, the publication and distribution of a Remarketing Circular is hereby authorized and approved. The form and content of the draft Remarketing Circular attached hereto as Exhibit "B" are hereby approved, subject to such changes, insertions and omissions and such filling of blanks therein as shall be approved by the Mayor or Mayor Pro Tem of the Issuer, execution thereof to the conclusive evidence of such approval. The Mayor or Mayor Pro Tem of the Issuer is hereby authorized to execute the Remarketing Circular on behalf of the Issuer, in substantially the form attached hereto, subject to such revisions as are authorized hereby.
The Mayor or the Mayor Pro Tem and the City Clerk or any Assistant City Clerk of the Issuer and the Issuer's Attorney, and such other officers and employees of Issuer as may be designated by the Mayor or Mayor Pro Tem, are each hereby designated as agents of the Issuer in connection with the substitution of the Letter of Credit as a Liquidity Facility for the 2006 Bonds, the remarketing of the 2006 Bonds in connection therewith and the execution and delivery of the First Supplement and are authorized and empowered, collectively or individually, to take all actions and steps and to execute and deliver all instruments, documents and contracts, whether or not expressly contemplated hereby, as may be necessary or appropriate in order to effect the purposes of this Resolution and the substitution of the Letter of Credit as an Alternate Liquidity Facility with respect to the 2006 Bonds and the remarketing of the 2006 Bonds in connection therewith.
This Resolution shall become effective immediately upon its adoption.
PASSED and ADOPTED in public session of the City Commission of the City of Leesburg, Florida this 17th_ day of December, 2007.
CITY OF LEESBURG, FLORIDA
APPROVED AS TO
FORM AND CORRECTNESS
Exhibit A - First Supplement
Exhibit B - Remarketing Circular