AUGUSTA — The new regional hospital has its financing, despite a thumbs-down from the state treasurer.

Commissioners of the Maine Health and Higher Educational Facilities Authority approved a $300 million bond issue Monday to facilitate construction of a 192-bed hospital in north Augusta.

“The Authority anticipates entering the national tax exempt bond market the week of July 25 to sell the bonds,” said Bob Lenna, the Authority’s executive director.

Financing is one of the last hurdles for MaineGeneral Medical Center in its quest to build a long-sought regional hospital on a site between the Harold Alfond Center for Cancer Care and Interstate 95.

“Scott Bullock, Chuck Hays and our chief financial officer, Mike Koziol, are in Boston today presenting our project to the people who are going to be selling the bonds to investors,” said Diane Peterson, hospital spokesman. “We expect to have the bonds sold by mid-August.”

Bullock is president of MaineGeneral Health, the parent corporation of the medical center; Hays is president and chief executive officer of the medical center.

“We are very pleased with yesterday’s approval of the $300 million bond issue from MHHEFA commissioners,” Peterson said. “It is a key step forward for this project.”

The hospital was required to secure a bond rating for the bond sale, and was rated Baa3 by Moody’s.

“It’s the lowest investment grade rating you can get,” Lenna said. “It’s really quite good. The hospital did a good job of making their case and showing that the feasibility study made sense.”

Fitch Ratings gave the hospital BBB-, essentially equal to Moody’s.

“In the national scale, for a comparatively small hospital in a rural state in a rural area to take on this big project and be able to not have to do an unrated sale is saying something quite good about what MaineGeneral did and accomplished to get an investment-grade rating,” Lenna said.

Lenna said the hospital bonds will yield approximately 6 percent for investors.

“Last week, the range went from 5.32 percent to 7.51 percent for 30-year bonds,” Lenna said. “The triple B market is a fairly volatile market.”

Lenna said state Treasurer Bruce Poliquin cast the only vote against approving the bond sale for the hospital at Monday’s board of directors meeting. The vote was 8-1.

The entire hospital project, including financing, is estimated at $412 million and includes $10 million in improvements at MaineGeneral Medical Center’s Thayer campus in Waterville.

Plans call for the regional hospital to house the inpatient beds now in Waterville and at the downtown Augusta campus. The latter facility is to close.

While the Authority approved issuance of up to $300 million in bonds, Lenna said he expects only $290 million in bonds will be floated.

He also said the hospital will use a $15 million surety bond — which it got with the aid of the Harold Alfond Foundation — for part of the reserve fund. The application to the Authority indicates that MaineGeneral is bringing almost $88 million to the table as an equity contribution and an additional $5 million in other funds.

Lenna said the bond rating puts the minimum purchase at $25,000, and the bonds may be made through a local broker, bank or investment agency.

Gov. Paul LePage signed a notice of approval of the bond issue under the Tax Equity Reform Act of 1984; however, the state is under no obligation to pay the bonds.

“This is a conduit bond sale,” Poliquin said. “There is no direct or indirect liability on the state of Maine to pay these bonds.”

The authority, an Augusta-based independent agency, “provides eligible nonprofit colleges, universities and licensed healthcare facilities access to capital markets by issuing low cost, tax-exempt bonds and lending the proceeds to finance or refinance the acquisition, construction, and renovation of facilities. Tax-exempt bonds issued through MHHEFA result in interest rates that are much lower than conventional bank financing.”

Betty Adams — 621-5631

[email protected]

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