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Goldman, Sachs & NEW ISSUE Book-Entry-Only In the opinion of Palmer & Dodge LLP, Bond Counsel, based upon an analysis of existing law and assuming, among other matters, compliance with certain covenants, interest on the Series B Bonds is excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986. Interest on the Series B 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 Series B Bonds and any profit on the sale of the Series B Bonds are exempt from Massachusetts personal income taxes and the Series B 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 Series B Bonds. See “TAX EXEMPTION” herein. $56,050,000 MASSACHUSETTS HEALTH AND EDUCATIONAL FACILITIES AUTHORITY Revenue Bonds, Southcoast Health System Obligated Group Issue, Series B (2004), Periodic Auction Reset Securities (PARSSM) Dated: Date of Delivery Due: August 15, 2027 The Series B Bonds will be issued by means of a book-entry only system evidencing ownership and transfer of the Series B Bonds on the records of The Depository Trust Company (“DTC”) and its participants. Details of payment of the Series B Bonds are more fully described in this Official Statement. The Series B Bonds will be initially issued as auction rate securities in a seven- day mode and are subject to conversion, at the option of the Southcoast Hospitals Group, Inc. (the “Institution”) and subject to certain restrictions, to other auction rate modes, to certain variable rate modes or to a fixed rate mode. The Series B Bonds will bear interest from the date of delivery thereof until May 24, 2004 (the “Initial Period”) at the rate initially established by Goldman, Sachs & Co. and thereafter at the applicable PARS Rate (as defined herein) determined pursuant to the Auction Procedures (as defined herein). Wilmington Trust Company, Wilmington, Delaware, will initially serve as Auction Agent for the Series B Bonds. Goldman, Sachs & Co. will initially serve as the sole Broker-Dealer with respect to the Series B Bonds. The Series B Bonds are subject to optional redemption, mandatory sinking fund redemption, special redemption and mandatory tender for purchase prior to maturity, as more fully described herein. The Series B Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Authority (the “Authority”) payable solely from the Revenues of the Authority, including payments to J.P. Morgan Trust Company, National Association, as Trustee, for the account of the Authority by the Institution, in accordance with the provisions of the Loan and Trust Agreement (the “Agreement”) dated as of April 20, 2004 among the Authority, the Institution and the Trustee. Such payments pursuant to the Agreement are a general obligation of the Institution. To secure such payments under the Agreement the Obligated Group will deliver a Note to the Trustee issued pursuant to that certain Amended and Restated Master Trust Indenture and Mortgage and Security Agreement dated as of May 4, 1993, as amended and restated as of April 20, 2004 (the “Master Trust Indenture”) among the Obligated Group (consisting of the Southcoast Health System, Inc., the Institution, Southcoast Physician Services, Inc., Southcoast Primary Care, Inc. and Visiting Nurse Association of Southeastern Massachusetts, Inc.) and J.P. Morgan Trust Company, National Association, as Master Trustee, all as more fully described herein. The Note, along with certain other notes issued under the Master Trust Indenture, will be secured by a pledge of the Gross Receipts of the Obligated Group and a mortgage on certain real property of the Institution. Reference is made to this Official Statement for pertinent security provisions of the Series B Bonds and for certain Bondowners’ rights. The scheduled payment of the principal of and interest on the Series B Bonds when due will be guaranteed under an insurance policy to be issued by MBIA Insurance Corporation concurrently with the delivery of the Series B Bonds. THE SERIES B BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF, OR A PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY SUCH POLITICAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES PROVIDED UNDER THE AGREEMENT. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE SERIES B BONDS. THE ACT DOES NOT IN ANY WAY CREATE A SO- CALLED MORAL OBLIGATION OF THE COMMONWEALTH OF MASSACHUSETTS TO PAY DEBT SERVICE IN THE EVENT OF DEFAULT BY THE INSTITUTION. THE AUTHORITY DOES NOT HAVE ANY TAXING POWER. The Series B 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 Palmer & Dodge LLP, Boston, Massachusetts, Bond Counsel to the Authority. Certain legal matters will be passed upon for the Obligated Group by their 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 Series B Bonds in definitive form will be available for delivery to DTC in New York, New York or its custodial agent on or about May 18, 2004. Goldman, Sachs & Co. May_________________________________ 6, 2004 SM Servicemark of Goldman, Sachs & Co. TABLE OF CONTENTS INTRODUCTION.........................................................................................................................................................1 SOURCES OF PAYMENT AND SECURITY FOR THE SERIES B BONDS ...........................................................2 THE AUTHORITY .......................................................................................................................................................4 THE SERIES B BONDS...............................................................................................................................................7 DEBT SERVICE REQUIREMENTS .........................................................................................................................16 BOND INSURANCE..................................................................................................................................................17 RIGHTS OF THE BOND INSURER..........................................................................................................................19 BOOK-ENTRY-ONLY SYSTEM ..............................................................................................................................19 THE MORTGAGED PROPERTY..............................................................................................................................21 ADDITIONAL DEBT.................................................................................................................................................21 MAXIMUM ANNUAL DEBT SERVICE RATIO COVENANT..............................................................................22 LIQUIDITY COVENANT..........................................................................................................................................22 SUBSTITUTION OF MASTER TRUST INDENTURE ............................................................................................23 THE PLAN OF REFUNDING....................................................................................................................................23 THE PROJECT ...........................................................................................................................................................23 ESTIMATED SOURCES AND USES OF FUNDS ...................................................................................................24 BONDOWNERS’ RISKS ...........................................................................................................................................24 CONTINUING DISCLOSURE...................................................................................................................................28 TAX EXEMPTION.....................................................................................................................................................28 LEGALITY OF THE SERIES B BONDS FOR INVESTMENT AND DEPOSIT ....................................................29 RATING......................................................................................................................................................................29 COMMONWEALTH NOT LIABLE ON THE SERIES B BONDS..........................................................................29 UNDERWRITING ......................................................................................................................................................30 LEGAL MATTERS ....................................................................................................................................................30
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