UAB Medicine Finance Authority Revenue Bonds Series 2019B
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PRELIMINARY OFFICIAL STATEMENT DATED MAY 10, 2019 NEW ISSUE – BOOK-ENTRY ONLY RATINGS: MOODY’S: Aa3, Stable Outlook S&P: AA-, Stable Outlook UAB MEDICINE FINANCE AUTHORITY $103,255,000* Revenue Bonds Series 2019B Bond Issuer, Beneficiaries and Purpose. The above-referenced bonds (the “Bonds”) are being issued by UAB Medicine Finance Authority, a public corporation under the laws of the State of Alabama (the “Authority”). The Bonds are being issued to finance the costs of certain capital improvements hereinafter described as the “Capital Improvements” for UAB Health System, an Alabama nonprofit corporation (“UABHS”) and the other members of the Obligated Group (defined below). See “THE FINANCING PLAN.” Financing Documents. The Bonds are being issued pursuant to a Trust Indenture (2019B) dated June 1, 2019 (the “2019B Bond Indenture”) between the Authority and Regions Bank, as trustee (the “Bond Trustee”). Proceeds of the Bonds will be loaned to UABHS pursuant to a Loan Agreement (Series 2019B) dated June 1, 2019 (the “2019B Loan Agreement”) between the Authority and UABHS. The loan repayment obligation of UABHS will be evidenced and secured by a promissory note from UABHS (the “2019B Note”) and an obligation (the “2019B Master Indenture Obligation”) issued under the Master Indenture described herein. Source of Payment and Security. The Bonds are limited obligations of the Authority payable solely out of payments by UABHS pursuant to the 2019B Loan Agreement and the 2019B Note, and payments by the Obligated Group pursuant to the 2019B Master Indenture Obligation. The Bonds will not be general obligations of the Authority, and are not debts or obligations of the State of Alabama. Master Indenture Obligation; Obligated Group. The 2019B Master Indenture Obligation, and all other obligations issued under the Master Indenture, will be secured by a pledge and assignment of Pledged Revenues (defined herein) of the Obligated Group. See “SOURCE OF PAYMENT AND SECURITY”. The current members of the Obligated Group under the Master Indenture are UABHS, The Board of Trustees of The University of Alabama (“UA Board”), acting through its University of Alabama at Birmingham operating division on behalf of University Hospital (“University Hospital”), University of Alabama Health Services Foundation, P.C. (“HSF”), and UAB Callahan Eye Hospital Authority (“CEH”). The liability of UA Board under the Master Indenture is limited to assets and revenues of University Hospital. Pricing Terms; Payment Dates; Redemption. Pricing information for the Bonds, including principal maturities, interest rates, payment dates, and redemption information is shown on the inside cover of this Official Statement. Form and Date of Delivery. The Bonds are being issued under the Book Entry System maintained by The Depository Trust Company (“DTC”). The Bonds are expected to be delivered on or around June [_______,] 2019, and will be dated their date of delivery. Legal Opinions. Maynard Cooper & Gale, P.C. has served as bond counsel to the Authority and will deliver its opinion with respect to the Bonds in substantially the form attached as Appendix i. Maynard Cooper & Gale, P.C. has also served as special counsel to the Obligated Group, and Bradley Arant Boult Cummings LLP has served as counsel to the underwriters shown below. Certain legal matters will be passed upon for UA Board, UABHS and CEH by University Counsel, and for HSF by its General Counsel. Financial Advisor. Protective Securities, a Division of ProEquities, Inc., Birmingham, Alabama, is serving as Financial Advisor to UABHS in connection with the issuance of the Bonds. Tax Status. Interest on the Bonds (i) will not be included in gross income of the holders for purposes of federal income taxation and (ii) will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, subject to limitations or exceptions described under “TAX STATUS.” The opinion of bond counsel will address these aspects of the tax status of the Bonds and should be read in its entirety for a complete understanding of the scope of the opinion and the conclusions expressed. Risk Factors. For a description of certain risk factors involved in an investment in the Bonds, see “RISK FACTORS.” Underwriters. The Bonds are being purchased from the Authority by the following underwriters: Raymond James BofA Merrill Lynch Morgan Stanley The date of this Official Statement is ________. This Preliminary Official Statement and the information contained therein 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 therein 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 the securities jurisdictionnor shall there be any in any in which such offer, * Preliminary; subject to change. $103,255,000* UAB Medicine Finance Authority Revenue Bonds Series 2019B Year Principal Interest (September 1) Amount* Rate Yield Price CUSIP(1) 2027 $2,810,000 2028 2,955,000 2029 3,100,000 2030 3,255,000 2031 3,420,000 2032 3,590,000 2033 3,770,000 2034 3,955,000 2035 4,155,000 2036 4,320,000 2037 4,495,000 2038 4,675,000 2039 4,860,000 2040 5,055,000 2041 5,260,000 2042 5,470,000 2043 5,685,000 2044 5,915,000 2045 6,150,000 2046 6,460,000 2047 6,780,000 2048 7,120,000 * Preliminary; subject to change. (1) CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by the CUSIP Service Bureau, operated by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the Authority and are included solely for the convenience of the registered owners of the Bonds. The Authority and the Underwriters are not responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness by the Authority on the Bonds and by the Underwriters on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. Date of the Bonds. The Bonds will be dated as of the date of their initial delivery. There will be no accrued interest payable as part of the initial offering price. Authorized Denominations. The Bonds may be issued in denominations of $5,000 or any integral multiple thereof. Interest Payment Dates. Interest on the Bonds is payable on March 1 and September 1 of each year, beginning September 1, 2019. Principal Payment Dates. The Bonds are scheduled to mature on September 1 in the years and amounts as shown above. Regular Record Date. The Regular Record Date with respect to the payment of interest on the Bonds will be the 15th day (whether or not a Business Day) of the month next preceding each interest payment date for such Bond. Redemption Prior to Maturity. The Bonds are subject to redemption prior to maturity as described herein. See “THE BONDS—Redemption Prior to Maturity.” TABLE OF CONTENTS Page INTRODUCTION ............................................................................................................................................................... 1 DEFINITIONS ................................................................................................................................................................... 3 THE BONDS .................................................................................................................................................................... 5 Pricing Information ................................................................................................................................................... 5 Date, Form of Bonds and Denominations ................................................................................................................. 5 Calculation of Interest Payments .............................................................................................................................. 5 Book Entry System ................................................................................................................................................... 5 Redemption Prior to Maturity ................................................................................................................................... 6 SOURCE OF PAYMENT AND SECURITY ............................................................................................................................ 7 Source of Payment .................................................................................................................................................... 7 2019B Trust Estate ..................................................................................................................................................