Funding the mission

Looking to refinance its outstanding debt, fund a renovation project and acquisition, and create a long-term financing plan with a reduced interest rate, nonprofit senior care operator Wellspring Lutheran Services enlisted the help of HJ Sims to close both a taxable bank loan and a tax-exempt bond issue. Already with five skilled nursing and assisted living communities operating in Michigan and a home health and hospice business in the state, Wellspring was looking to both improve and expand its mission. So, in order to fund those ambitions, HJ Sims arranged a $31.1 million taxable loan and $13.5 million of tax-exempt bonds. One regional bank provided the loan while another regional bank purchased the bonds. For both financings, 10-year interest rate swaps, with five-year cancellation options, were put in place to provide long-term fixed rates, with the funding for the construction project not swapped until drawn on to take advantage of the current low-rate environment. Of the total $44.6 million in financing, $8.85 will be used for the renovation project, $3.8 million will fund the SNF acquisition, and $5 million went to establish an operating reserve fund to improve liquidity. Also, approximately $25.9 million of outstanding bank loans were refinanced. Aaron Rulnick led the HJ Sims team on this transaction.