Working on behalf of Carmel Manor, Inc. and its sponsor, The Carmelite System, Inc., Cain Brothers successfully closed $17.14 million of healthcare facilities revenue refunding bonds through Kentucky Economic Development Finance Authority. The proceeds from the tax-exempt, public, fixed-rate bonds were used to refinance an existing bank loan and pay certain costs of issuance. Also as part of the refinancing, an outstanding fixed-pay interest rate swap that hedged the refunded bank loan was terminated and resulted in a $1.4 million positive termination payment to Carmel Manor, a Kentucky-based not-for-profit corporation that operates a senior care facility with 95 skilled nursing beds, 80 personal care beds provides short-term rehab services in Fort Thomas, Kentucky.
The Series 2022 financing was structured as interest-only bonds with a single bullet principal payment due at maturity. The Carmelite System Obligated Group, a New York not-for-profit corporation that operates skilled nursing, assisted living and independent living facilities that serve communities in Florida, Illinois, Iowa, Kentucky, Massachusetts, New York, Ohio and Ireland, provided a guaranty of the principal payment. All interest through final maturity was pre-funded by The Carmelite System and its sponsor, The Carmelite Sisters for the Aged and Infirm, and will be held in a trustee account. The prefunded, interest-only structure eliminates the requirement for Carmel Manor to make debt service payments during the next five years and improve cash flow while management implements various improvement plans to better position the community for a debt restructuring at the end of, or prior to, the five-year bond maturity. Cain Brothers acted as sole manager on the transaction.
