The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Public Hospitals Authority’s (PHA) financial adviser yesterday expressed confidence that there would be “no problem” in getting its $25 million bond issue, which is set to launch on Monday, fully subscribed.

Michael Anderson, RoyalFidelity Merchant Bank & Trust’s president, told Tribune Business that there had been a “good” market response in anticipation of the offering coming to market.

“At this stage, we’ve had a fairly good response to expectations that it’s coming out,” he told Tribune Business. “I don’t think there’s going to be any problem getting $25 million for the PHA.”

The Series B bonds will carry a 6 per cent interest coupon, and pay out to investors on a bi-annual basis, with the first payment set to be made on March 31, 2016.

The offer, for which RoyalFidelity is acting as financial adviser and placement agent, will launch on Monday, November 30, and close on December 11.

Investor subscriptions will be allocated on a ‘first come, first served’ basis, in a bid to generate investor demand, as the earlier they come in, the greater the chance they will receive 100 per cent of their requests.

Investor principal will be repaid in 18 equal annual instlaments, beginning on September 30 next year and carrying through to 2033.

Tribune Business revealed last week how proceeds from the offering will be used to repay the Royal Bank of Canada (RBC) construction loan, which financed the new Princess Margaret Hospital (PMH) Critical Care Block.

The first PHA bond issue, placed in late 2013 by RoyalFidelity, was oversubscribed by $3.3 million - raising $48.3 million, and exceeding the $45 million target.

The issue was marred, however, because the $48.3 million proceeds were left sitting unclaimed in a CIBC FirstCaribbean International Bank (Bahamas) bank account for more than three months after the offering closed on November 15, 2013.

Investor confirmations were eventually sent out, but the PHA’s failure to take the money, and apply it to the purposes for which it was raised, resulted in the loss-making Authority incurring unanticipated interest payment costs.

With the bond proceeds sitting idle, several loans were not repaid and left active, hence the additional interest payments the PHA has incurred to service them.

Sources close to the matter said at the time that the PHA had to pay 6 per cent interest on the investor monies as they sat in escrow. This, too, created extra costs for the Government/PHA.