MONTGOMERY COUNTY HIGHER EDUCATION and HEALTH AUTHORITY Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc
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PRELIMINARY OFFICIAL STATEMENT DATED AS OF OCTOBER 6, 2017 NEW ISSUE NOT RATED BOOK ENTRY ONLY In the opinion of Ballard Spahr LLP, Bond Counsel, interest on the Series 2017 Bonds is excludable from gross income for purposes of federal income tax, assuming continuing compliance with the requirements of the federal tax laws. Interest on the Series 2017 Bonds is not a preference item for purposes of either individual or corporate federal alternative minimum tax; however, interest paid to corporate holders of the Series 2017 Bonds may be indirectly subject to alternative minimum tax under circumstances described under “TAX MATTERS” herein. Bond Counsel is also of the opinion that, under the laws of the Commonwealth of Pennsylvania, interest on the Series 2017 Bonds is exempt from Pennsylvania personal income tax and corporate net income tax, and the Series 2017 Bonds are exempt from personal property taxes in Pennsylvania. See “TAX MATTERS” herein. $12,555,000* MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017 Dated: Date of Delivery Due: December 1, as shown on the inside cover The Series 2017 Bonds (as defined herein) are issued by Montgomery County Higher Education and Health Authority, a body corporate and politic organized and existing under the laws of the Commonwealth of Pennsylvania (the “Issuer”), under a Bond Trust Indenture, dated as of November 1, 2017 (the “Bond Indenture”), between the Issuer and U.S. Bank National Association, as bond trustee (the “Bond Trustee”). The Series 2017 Bonds will be limited obligations of the Issuer and, except to the extent that payment thereof may be made from the proceeds of the sale of the Series 2017 Bonds or any investment income therefrom, will be payable solely out of certain payments under the Loan Agreement and the Series 2017 Note (each as defined herein), by recourse (i) to the collateral pledged pursuant to the Master Indenture (as defined herein), (ii) to the Mortgages (as defined herein), and (iii) from moneys pledged under the Bond Indenture as described herein. That certain Master Trust Indenture dated as of November 1, 2017 (the “Master Trust Indenture”), as supplemented by Supplemental Master Trust Indenture Number 1 dated as of November 1, 2017 (the “Supplemental Indenture”; the Master Trust Indenture and the Supplemental Indenture, collectively, the “Master Indenture”), between the Obligated Group, whose sole current member is PENNSYLVANIA LTC, INC. a Pennsylvania non-profit corporation (the “Obligor”) and U.S. Bank National Association, as Master Trustee sets forth certain covenants and obligations of the Obligor with respect to the Series 2017 Note, which is being issued concurrently with the Series 2017 Bonds. The Issuer will loan the proceeds of the Series 2017 Bonds to the Obligor pursuant to a Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), between the Issuer and the Obligor. The Obligor will use the proceeds of the Series 2017 Bonds, together with certain other moneys, to finance (i) the current refunding of the outstanding Horsham Industrial and Commercial Development Authority Health Care Facilities Refunding Revenue Bonds (Pennsylvania LTC, Inc. Project) Series 2007 (Tax-Exempt), issued in the original par amount of $7,265,000, the proceeds of which were applied to finance or refinance the acquisition of and capital expenditures with respect to Edgehill Nursing and Rehabilitation Center, a 60-bed nursing facility located in Glenside, Pennsylvania (the “Edgehill Facility”) and Linwood Nursing and Rehabilitation Center (formerly known as Mountain Rest Nursing Home), a 102-bed nursing facility located in Scranton, Pennsylvania (the “Linwood Facility”); (ii) the demolition of one wing of the Linwood Facility and the construction, equipping and furnishing of a new 2-story, 46-bed replacement wing at the Linwood Facility; (iii) miscellaneous capital expenditures at the Edgehill Facility and the Linwood Facility; (iv) the funding of a debt service reserve fund for the Series 2017 Bonds and capitalized interest on the Series 2017 Bonds; and (v) the payment of certain costs of issuing the Series 2017 Bonds (collectively, the “Project”). The sources of payment of, and security for, the Series 2017 Bonds are more fully described in this Official Statement. The Series 2017 Bonds are stated to mature as set forth on the inside cover. Interest on the Series 2017 Bonds is payable on June 1 and December 1 in each year until maturity or prior redemption, commencing June 1, 2018. The Series 2017 Bonds are subject to acceleration of maturity and optional, extraordinary and mandatory redemption, in whole or in part, prior to maturity at the prices and under the circumstances described herein. See “THE SERIES 2017 BONDS.” The Series 2017 Bonds when issued will be registered only in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Series 2017 Bonds. Purchasers of the Series 2017 Bonds will not receive certificates representing their interest in the Series 2017 Bonds purchased. Ownership by the beneficial owners of the Series 2017 Bonds will be evidenced by book-entry only. Principal of and interest on the Series 2017 Bonds will be paid by the Bond Trustee to DTC, which in turn will remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Series 2017 Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments on the Series 2017 Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC and its participants. See “BOOK-ENTRY ONLY SYSTEM” in Appendix F hereto. The Series 2017 Bonds are not rated. An investment in the Series 2017 Bonds involves a certain degree of risk related to, among other things, the nature of the Obligor’s business, the regulatory environment, and the provisions of the principal documents. A prospective Bondholder is advised to read “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS” and “RISK FACTORS” herein for a discussion of certain risk factors that should be considered in connection with an investment in the Series 2017 Bonds. This cover page is for quick reference and does not summarize the issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. THE SERIES 2017 BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE REPAYMENTS AND OTHER FUNDS PROVIDED PURSUANT TO THE BOND INDENTURE AND THE LOAN AGREEMENT AND SECURED BY THE COLLATERAL, REAL AND PERSONAL, PLEDGED BY THE OBLIGOR AS SECURITY THEREFOR. NEITHER THE GENERAL CREDIT OF THE ISSUER NOR THE GENERAL CREDIT OR TAXING POWER OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA (THE “COUNTY”), THE COMMONWEALTH OF PENNSYLVANIA (THE “COMMONWEALTH”) NOR ANY OTHER POLITICAL SUBDIVISION THEREOF IS OR SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS, AND SUCH BONDS SHALL NOT BE DEEMED OBLIGATIONS OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2017 BONDS. THE ISSUER HAS NO TAXING POWER. The Series 2017 Bonds are being offered, subject to prior sale and withdrawal of such offer without notice, when, as and if issued by the Issuer and accepted by Herbert J. Sims & Co., Inc. (the “Underwriter”) subject to the approving opinion of Ballard Spahr LLP, Philadelphia, Pennsylvania, Bond Counsel. Certain legal matters will be passed upon for the Issuer by its counsel, Douglas B. Breidenbach, Jr., Esquire, Pottstown, Pennsylvania; for the Obligor by its counsel, The Law Office of Timothy E. Dixon, PA, Ellicott City, Maryland and its Pennsylvania counsel, Law Office of Robert W. Scott, PC, Media, Pennsylvania; and for the Underwriter by its counsel, Eckert Seamans Cherin & Mellott, LLC, Philadelphia, Pennsylvania. It is expected that the Series 2017 Bonds will be available for delivery to the Bond Trustee on behalf of DTC under the DTC FAST system of registration, against payment therefor, on or about November ____, 2017. Dated: ____________, 2017 This Preliminary Official Statement and the information contained herein are subject to change, completion or amendment without notice. Under no circumstances shall this Preliminary to sell or the Official Statement constitute an offer This Preliminary completion or amendment without notice. contained herein are subject to change, Official Statement and the information prior of such jurisdiction. or qualification under the securities to registration be unlawful laws solicitation or sale would sale of these Series jurisdiction nor shall there be any 2017 Bonds in any in which such offer, to buy, solicitation of an offer * Preliminary, subject to change. $12,555,000* MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017 Dated: Date of Delivery Due: As shown below MATURITIES, AMOUNTS, INTEREST RATES, YIELDS, PRICES and CUSIPS1 $830,000* _____% Term Bonds due December 1, 2022* Yield _____%, Price ______, CUSIP _______ $1,270,000* _____% Term Bonds due December 1, 2027* Yield _____%, Price ______, CUSIP _______ $1,625,000* _____% Term Bonds due December 1, 2032* Yield _____%, Price ______, CUSIP _______ $2,145,000* _____% Term Bonds due December 1, 2037* Yield _____%, Price ______, CUSIP _______ $6,685,000* _____% Term Bonds due December 1, 2047* Yield _____%, Price ______, CUSIP _______ * Preliminary, subject to change. 1 CUSIP is a registered trademark of the American Bankers Association.