Massachusetts Development Finance Agency
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PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 9, 2017 NEW ISSUE – Book-Entry-Only RATINGS: See “RATINGS” herein. In the opinion of Hinckley, Allen & Snyder LLP, Bond Counsel, based upon an analysis of existing law and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Under existing law, interest on the Bonds and any profit on the sale of the Bonds are exempt from Massachusetts personal income taxes and the Bonds are exempt from Massachusetts personal property taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See “TAX EXEMPTION” herein. $77,650,000* MASSACHUSETTS DEVELOPMENT FINANCE AGENCY Revenue Bonds, UMass Memorial Health Care Obligated Group Issue Series K (2017) Dated: Date of Delivery Due: July 1, as shown on the inside cover The Massachusetts Development Finance Agency (the “Issuer”) is offering its $77,650,000* Revenue Bonds, UMass Memorial Health Care Obligated Group Issue, Series K (2017) (the “Bonds”). The Bonds will be issued only as fully-registered bonds without coupons and, when issued, will be registered in the name of Cede & Co. as Bondowner and nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in denominations of $5,000 or any multiple thereof. Purchasers will not receive certificates representing their interest in Bonds purchased. So long as Cede & Co. is the Bondowner, as nominee of DTC, references herein to the Bondowners or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Bonds. See “THE BONDS - Book-Entry-Only System” herein. Principal of and semiannual interest on the Bonds will be paid by U.S. Bank National Association, as trustee (the “Trustee”). So long as DTC or its nominee, Cede & Co., is the Bondowner, such payments will be made directly to such Bondowner, as more fully described herein. Interest will be payable on July 1, 2017 and semiannually thereafter on each January 1 and July 1 to the Bondowners of record as of close of business on the fifteenth day of the month preceding the date on which interest is to be paid. The Bonds are subject to redemption prior to maturity, including redemption at par in certain circumstances, as set forth in this Official Statement. The Bonds shall be special obligations of the Issuer payable solely from the Revenues, as defined herein, of the Issuer, including payments to the Trustee, for the account of the Issuer by UMass Memorial Health Care, Inc. (the “Parent”), UMass Memorial Medical Center, Inc. (the “Medical Center”) and HealthAlliance Hospitals, Inc. (“HealthAlliance” and, collectively with the Parent and the Medical Center, the “Institution”) in accordance with the provisions of the Loan and Trust Agreement dated as of February 1, 2017 (the “Agreement”), by and among the Issuer, the Institution and the Trustee. To secure the payments under the Agreement, the Parent, the Medical Center, HealthAlliance and UMass Memorial Health Ventures, Inc. (collectively, the “Obligated Group”) will issue a note (the “Note”) to the Trustee secured by a pledge of the Gross Receipts (as defined herein) of the Obligated Group pursuant to a Master Trust Indenture dated as of December 1, 1998, as amended and supplemented, among the Obligated Group and U.S. Bank National Association, as Master Trustee, as more fully described herein. The Medical Center also has granted a mortgage on certain real estate to secure the Note and the Prior Obligations (as defined herein). THE BONDS DO NOT CONSTITUTE A GENERAL OBLIGATION OF THE ISSUER OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF. THE PRINCIPAL, REDEMPTION PRICE, IF ANY, AND INTEREST ON THE BONDS ARE PAYABLE SOLELY FROM THE REVENUES AND FUNDS PLEDGED FOR THEIR PAYMENT UNDER THE AGREEMENT. THE ISSUER HAS NO TAXING POWER UNDER THE ACT. The Bonds are offered when, as and if issued and received by the Underwriter, subject to prior sale, to withdrawal or modification of the offer without notice, and to the approval of their legality and certain other matters by Hinckley, Allen & Snyder LLP, Boston, Massachusetts, Bond Counsel to the Issuer. Certain legal matters will be passed upon for the Obligated Group by its counsel, Ropes & Gray LLP, Boston, Massachusetts. Certain legal matters will be passed upon for the Underwriter by its counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts. It is expected that the Bonds in definitive form will be available for delivery to DTC in New York, New York or its custodial agent on or about February__, 2017. MORGAN STANLEY January __, 2017 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, buy, to Under no circumstances shall this Preliminary to sell or the solicitation of an offer This Preliminary Official Statement constitute an offer contained herein are subject to completion or amendment. Official Statement and the information such jurisdiction. prior of any or qualification under the securities to registration be unlawful laws solicitation or sale would sale of these securities jurisdictionnor shall there be any in any in which such offer, * Preliminary; subject to change. $77,650,000* Massachusetts Development Finance Agency Revenue Bonds, UMass Memorial Health Care Obligated Group Issue Series K (2017) Delivery Date: February __, 2017 Maturity Interest CUSIP (July 1) Principal Rate Price Number† $_________ ___% Term Bonds due July 1, 20__, Price: _____%, CUSIP Number†: ______ ___ * Preliminary; subject to change. † CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright © 2017 CUSIP Global Services. The CUSIP numbers listed above are being provided solely for the convenience of the Bondowners and none of the Members of the Obligated Group, the Underwriter, or the Issuer makes any representations with respect to such numbers or undertakes any responsibility for their accuracy. The CUSIP numbers may change as a result of subsequent actions including, but not limited to, complete or partial refunding or other transactions in the secondary market. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, salesperson or other person has been authorized by the Issuer, the Obligated Group or the Underwriter to give information or to make representations with respect to the Bonds, other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. Certain information contained herein has been obtained from the Obligated Group, The Depository Trust Company and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation of the Issuer. This Official Statement is submitted in connection with the sale of securities referred to herein and may not be used, in whole or in part, for any other purpose. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above since the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The Bonds have not been registered under the Securities Act of 1933, as amended, and the Agreement has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such acts. i TABLE OF CONTENTS Page INTRODUCTION ......................................................................................................................................................... 1 SOURCES OF PAYMENT AND SECURITY FOR THE BONDS ............................................................................ 1 THE ISSUER ................................................................................................................................................................