HJ Sims Successfully Completes Innovative Refinancing and Expansion Project FinancingFAIRFIELD, Conn., Oct. 21, 2019 /PRNewswire/ -- HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the closing of a $14.5 million financing in August for Presbyterian SeniorCare d/b/a Shenango on the Green (Shenango). An affiliate of Presbyterian SeniorCare Network (PSCN), Shenangois a continuing care retirement community/life plan community located in New Wilmington, PA.
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Sims worked with PSCN to analyze refunding opportunities for Shenango's outstanding Series 2007 Bonds in late 2017, coinciding with Shenango's continued planning for an independent living expansion project. Sims evaluated multiple plans of finance, including a public issuance of bonds and a direct placement with a commercial bank.
Based on market conditions in 2019, and the combination of refinancing and capital needs, Shenango elected to pursue a direct placement with a commercial bank, selecting First National Bank of Pennsylvania (FNB). Its objectives included: generating interest rate savings on the refinancing; implementing a cost-effective financing for the expansion project; maintaining unified financing covenants and operating, financial and strategic flexibility.
Funding of the expansion is segmented into two phases: Phase 1 includes the construction of the majority of the cottages, site work, predevelopment and pre-marketing expenses. Phase 2 includes construction of the remainder of the cottages, community center and funding of capital improvements at the existing community.
The $14.5 million financing closed in August. Proceeds from the $10.5 million refunding note were used to refinance the currently callable Series 2007 Bonds. Proceeds from the $3.96 million capital projects note will be used to finance the expansion. Innovative features of the financing include the use of anticipated entrance fees to fund the final sub-phase of cottages and pay-down a portion of the project financing, allowing Shenango to reduce the amount of financing and total debt service. Given prevailing interest rates, Shenango drew all funds at closing, rather than drawing them as costs are incurred, and will invest them at a nominal investment rate. Further, it entered into a current starting swap to hedge its interest rate risk on both the project financing and refinancing.
"Once again, Sims has shown their flexibility and focus in assisting PSCN maneuver through a small and unique project financing in a BIG way! While the refinancing and expansion totaled about $15 million, the interest expense reduction on the new money will garner the community a savings of almost $200,000 annually. The new capital will be used to develop a new independent living option, incorporating the introduction of smart home technology, to serve seniors in the rural Lawrenceand Mercer county community," said Joe Wenger, CPA, NHA, Senior Vice President & Chief Financial Officer , PSCN.