Duke University Health System, Inc. and References to “Bonds” Or “Securities” Mean the 2017 Bonds Offered Hereby
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PRELIMINARY OFFERING MEMORANDUM DATED MAY 18, 2017 New Issue/DTC Book-Entry Only Ratings: Moody’s: Aa2 S&P: AA Fitch: AA (See “Ratings” herein) $600,000,000* DUKE UNIVERSITY HEALTH SYSTEM, INC. Taxable Bonds Series 2017 $600,000,000* __% Term Bond, Due June 1, 2047* - Yield: ____% CUSIP+: _________ Our Business: We are a North Carolina nonprofit corporation. We operate an academic healthcare delivery system that includes Duke University Hospital, which is among the country’s leading hospitals. See Appendix A. Use of Proceeds: We will use the proceeds of the 2017 Bonds (1) to finance various capital improvements to our healthcare system, (2) for other eligible corporate purposes, and (3) to pay certain costs of issuing the 2017 Bonds. See “Plan of Finance” on page 27. Security and The 2017 Bonds will be general, unsecured obligations of ours. As further Source of Payment: evidence of our payment obligations with respect to the 2017 Bonds, we will issue Obligation No. 46 under the Master Indenture to the Bond Trustee. See “Security and Sources of Payment” on page 5. Tax Status: Interest on the 2017 Bonds will be includable in gross income of the owners thereof for federal income tax purposes. See “Tax Treatment” on page 29. Registration Exemption: The 2017 Bonds have not been registered under federal securities laws in reliance upon an exemption from registration under Section 3(a)(4) of the Securities Act of 1933, as amended. Dated: Date of delivery. Delivery Date: On or about June 6, 2017. Denominations: $1,000 or any multiple thereof. Interest Payment Dates: June 1 and December 1 of each year, commencing December 1, 2017. Redemption: The 2017 Bonds are subject to optional redemption prior to maturity. See “Description of the 2017 Bonds—Redemption” on page 24. Our Counsel: Christy M. Gudaitis, Associate University Counsel, Durham, North Carolina and Parker Poe Adams & Bernstein LLP, Raleigh, North Carolina and Atlanta, Georgia. Underwriters’ Counsel: Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina. Limited Information: Only selected information is presented on this cover. You should read this offering memorandum in its entirety to make an informed decision regarding the 2017 Bonds. J.P. MORGAN JEFFERIES LLC June __, 2017 * Preliminary, subject to change. + CUSIP data herein is provided for convenience of reference only. We, the underwriters and their agents take no This preliminary offering memorandum and the information contained herein are subject to completion and amendment. Under no circumstances shall this preliminary offering memorandum constitute an offer to sell or the solicitation of an Under no circumstances shall this preliminary constitute an offer memorandum offering This preliminary contained herein are subject to completion and amendment. and the information memorandum offering prior of such jurisdiction. or qualification under the securities to registration be unlawful laws solicitation or sale would these securities sale of these securities jurisdiction nor shall there be any in any in which such offer, to buy offer responsibility for the accuracy of such data. You should rely only on the information contained in this offering memorandum. We have not, and the underwriters have not, authorized any person who offers or sells the 2017 Bonds to provide you with information in addition to or inconsistent with the information contained in this offering memorandum, or to represent anything else about us, the other members of the Combined Group or the 2017 Bonds. If anyone provides you with additional or inconsistent information, you should not rely on it. Unless we specify an earlier date, the information appearing in this offering memorandum is current as of the date of this offering memorandum shown on the front cover. Our business, financial condition, results of operations or prospects may have changed since that date. The underwriters have provided the following sentence for inclusion in this offering memorandum. The underwriters have reviewed the information in this offering memorandum in accordance with, and as part of, their respective responsibilities to you under the federal securities laws as applied to the facts and circumstances of this transaction, but the underwriters do not guarantee the accuracy or completeness of such information. We are not, and the underwriters are not, offering to sell the 2017 Bonds or soliciting an offer to buy the 2017 Bonds in any jurisdiction where the offer or sale of the 2017 Bonds is not permitted. By placing an order for the 2017 Bonds with an underwriter, you agree that if you are allocated 2017 Bonds, the underwriters may disclose your identity as an initial purchaser of the 2017 Bonds to us unless you advise your sales representative otherwise. In reliance upon exemptions, we are not (1) registering the 2017 Bonds under the Securities Act of 1933, as amended, or any state securities laws or (2) qualifying the Trust Agreement under the Trust Indenture Act of 1939. Neither the Securities and Exchange Commission nor any other federal or state securities commission or regulatory authority has recommended, approved or disapproved the 2017 Bonds or determined if this offering memorandum is adequate, accurate or complete. Any representation to the contrary is a criminal offense. In connection with this offering, the underwriters may overallot or effect transactions that stabilize or maintain the market price of the 2017 Bonds at a level above that which might otherwise prevail in the open market. The underwriters may discontinue any such stabilizing at any time. * * * * * Certain statements included or incorporated by reference in this offering memorandum constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “project,” “expect,” “anticipate,” “intend,” “believe,” “estimate,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We do not plan to issue any updates or revisions to those forward-looking statements if or when our expectations, or events, conditions or circumstances on which such statements are based, occur. INFORMATION CONCERNING OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS OUTSIDE THE UNITED STATES ANY REFERENCES IN THIS OFFERING MEMORANDUM TO THE “ISSUER” MEAN DUKE UNIVERSITY HEALTH SYSTEM, INC. AND REFERENCES TO “BONDS” OR “SECURITIES” MEAN THE 2017 BONDS OFFERED HEREBY. MINIMUM UNIT SALES THE BONDS WILL TRADE AND SETTLE ON A UNIT BASIS (ONE UNIT EQUALING ONE BOND OF $1,000 PRINCIPAL AMOUNT). FOR ANY SALES MADE OUTSIDE THE UNITED STATES, THE MINIMUM PURCHASE AND TRADING AMOUNT IS 150 UNITS (BEING 150 BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF $150,000). NOTICE TO INVESTORS IN THE EUROPEAN ECONOMIC AREA (“EEA”) THIS OFFERING MEMORANDUM IS NOT A PROSPECTUS FOR THE PURPOSES OF EUROPEAN COMMISSION REGULATION 809/2004 OR EUROPEAN COMMISSION DIRECTIVE 2003/71/EC (AS AMENDED, INCLUDING BY EUROPEAN COMMISSION DIRECTIVE 2010/73/EU, AS APPLICABLE) (THE “PROSPECTUS DIRECTIVE”). IT HAS BEEN PREPARED ON THE BASIS THAT ALL OFFERS OF THE 2017 BONDS WILL BE MADE PURSUANT TO AN EXEMPTION UNDER ARTICLE 3 OF THE PROSPECTUS DIRECTIVE, AS IMPLEMENTED IN MEMBER STATES OF THE EEA, FROM THE REQUIREMENT TO PRODUCE A PROSPECTUS FOR SUCH OFFERS. THIS OFFERING MEMORANDUM IS ONLY ADDRESSED TO AND DIRECTED AT PERSONS IN MEMBER STATES OF THE EEA WHO ARE “QUALIFIED INVESTORS” WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE AND ANY RELEVANT IMPLEMENTING MEASURE IN EACH MEMBER STATE OF THE EEA (“QUALIFIED INVESTORS”). THIS OFFERING MEMORANDUM MUST NOT BE ACTED ON OR RELIED ON IN ANY SUCH MEMBER STATE OF THE EEA BY PERSONS WHO ARE NOT QUALIFIED INVESTORS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS OFFERING MEMORANDUM RELATES IS AVAILABLE ONLY TO QUALIFIED INVESTORS IN ANY MEMBER STATE OF THE EEA AND WILL NOT BE ENGAGED IN WITH ANY OTHER PERSONS. NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED KINGDOM THIS OFFERING MEMORANDUM HAS NOT BEEN APPROVED FOR THE PURPOSES OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (“FSMA”) AND DOES NOT CONSTITUTE AN OFFER TO THE PUBLIC IN ACCORDANCE WITH THE PROVISIONS OF SECTION 85 OF THE FSMA. THIS OFFERING MEMORANDUM IS FOR DISTRIBUTION ONLY TO, AND IS DIRECTED SOLELY AT, PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM, (II) ARE INVESTMENT PROFESSIONALS, AS SUCH TERM IS DEFINED IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “FINANCIAL PROMOTION ORDER”), (III) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE FINANCIAL PROMOTION ORDER, OR (IV) ARE PERSONS TO WHOM AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FSMA) IN CONNECTION WITH THE ISSUE OR SALE OF ANY SECURITIES MAY OTHERWISE BE LAWFULLY COMMUNICATED OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS OFFERING MEMORANDUM IS DIRECTED ONLY AT RELEVANT PERSONS AND MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS, INCLUDING IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA APPLIES TO THE INSTITUTION. ANY INVESTMENT OR INVESTMENT ACTIVITY