Cleveland Clinic Health System Obligated Group - FMSbonds.com
Cleveland Clinic Health System Obligated Group - FMSbonds.com Cleveland Clinic Health System Obligated Group - FMSbonds.com
Indenture and on any outstanding Master Notes, and other entities may become Obligated Issuers and jointly andseverally liable under the Master Trust Indenture, including with respect to Master Notes previously or thereafterissued under the Master Trust Indenture, all as provided in the Master Trust Indenture. See “APPENDIX C —SUMMARY OF BASIC DOCUMENTS — The Master Trust Indenture — The Combined Group.” The ClevelandClinic has covenanted, however, that it will not withdraw from the Obligated Group as long as the Series 2008ABonds are outstanding.The Huntington National Bank, Columbus, Ohio, is acting as bond trustee and paying agent with respect tothe Series 2008A Bonds, as bond trustee for the Variable Rate Bonds (as hereinafter defined) and as Master Trusteeunder the Master Trust Indenture. The Huntington National Bank also serves as bond trustee (in such capacity, the“County Bond Trustee”) under the Bond Indenture dated as of June 15, 1987, as amended and supplemented (the“County Bond Indenture”), pursuant to which certain outstanding revenue bonds to be refunded by a portion of theSeries 2008A Bonds were issued by the County of Cuyahoga, Ohio (the “County”).See “APPENDIX A — PART II. OBLIGATED GROUP” for a description of the Obligated Issuers, theirfacilities and their operations. APPENDIX B also includes certain audited financial statements of the ClevelandClinic and its controlled affiliates, including the other Obligated Issuers and certain other corporations that are notObligated Issuers (collectively, the “Cleveland Clinic Health System”).Although the Cleveland Clinic, CCHS- East Region, Fairview, Lutheran, Marymount and Florida Clinic arethe only Obligated Issuers under the Master Trust Indenture, the Cleveland Clinic controls several other entities thatoperate health care facilities. See “APPENDIX A — PART V. NON-OBLIGATED HEALTH SYSTEMPARTICIPANTS.”Concurrent IssuesConcurrent with the issuance of the Series 2008A Bonds, the State is expected to issue, acting by andthrough the Commission, its $670,000,000 Hospital Revenue Bonds, Series 2008B (Cleveland Clinic Health SystemObligated Group) in one or more series or subseries (collectively, the “Variable Rate Bonds” and, together with theSeries 2008A Bonds, the “Series 2008 Bonds”) to provide additional financing for the purposes for which the Series2008A Bonds are being issued. The Variable Rate Bonds will bear interest at variable rates of interest per year,including, initially, daily, weekly and commercial paper rates. The Variable Rate Bonds will be subject to optionaltender at the option of their holders, as well as mandatory tender under certain circumstances. The payment of theprincipal of and interest on the Variable Rate Bonds, and the purchase price for optionally or mandatorily tenderedVariable Rate Bonds, will be the obligation of the Cleveland Clinic under the State Financing Lease and of eachObligated Issuer under a promissory note to be issued under the Master Trust Indenture to secure that obligation andthe obligation of the Cleveland Clinic to make payments under the State Financing Lease in amounts and at timessufficient to pay Bond Service Charges on the Variable Rate Bonds (the “Variable Rate Note”). No liquidity facilityfrom a financial institution will be available to make any payment of such purchase price. The Variable Rate Bondswill be issued pursuant to and secured on a parity basis with the Series 2008A Bonds by the Bond Indenture.Use of ProceedsThe net proceeds of the Series 2008 Bonds, together with funds held by the Bond Trustee for the benefit ofthe hereinafter defined Bonds to be Refunded and the proceeds of the Variable Rate Bonds, will be used to (i) pay,or reimburse the Cleveland Clinic for the cost of acquiring, constructing, equipping and otherwise improving certainfacilities of the Cleveland Clinic and certain of its controlled affiliates, (ii) refund several series of outstandingrevenue bonds issued by the County under the County Bond Indenture (as hereinafter more particularly described,the “Bonds to be Refunded”) and (iii) pay costs relating to the issuance of the Series 2008 Bonds and the refundingof the Bonds to be Refunded. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OFFUNDS.”2
Security and Sources of Payment for the Series 2008A BondsGeneral. The Series 2008A Bonds will be special obligations of the State and will be payable solely fromthe Hospital Receipts (i.e., all rentals and other money received by the Commission or the Bond Trustee pursuant tothe State Financing Lease, including, without limitation, Basic Rent, money and investments credited to the SpecialFunds created under the Bond Indenture and income from the investment thereof) and amounts payable by theObligated Group under the Sixtieth Master Note delivered by the Cleveland Clinic to the Bond Trustee.No revenues of the State or the Commission, other than as described in the immediately precedingparagraph, will be pledged to secure the payment of any amounts payable on or with respect to the Series 2008ABonds, and the Series 2008A Bonds will not be secured by any mortgage of or security interest in any property ofthe Obligated Issuers, other than the Gross Receipts of the Obligated Issuers, which are pledged under the MasterTrust Indenture to secure Master Notes, and except to the extent that the State Financing Lease may be deemed toconstitute a security agreement and to create a security interest under applicable Ohio law. The assignment by theCommission of the Hospital Receipts may be subject to limitations on enforceability and may be subordinated byoperation of law to the interests and claims of others in certain instances. See “BONDHOLDERS’ RISKS —Enforcement of Remedies; Risks of Bankruptcy” and “— Certain Matters Relating to Enforceability of SecurityInterest in Gross Receipts.” The Series 2008A Bonds, and the obligation to pay principal of and interest and anypremium on (collectively, “Bond Service Charges”) the Series 2008A Bonds, will not represent or constitute generalobligations, debt or bonded indebtedness or a pledge of the assets, moneys or faith and credit of the Commission, theState or of any political subdivision thereof, and the owners of the Series 2008A Bonds will not have any right tohave excise, ad valorem or other taxes levied by the Commission, the State or the taxing authority of any politicalsubdivision of the State, for the payment thereof or rights to any revenue of the State or the Commission other thanas described in the immediately preceding paragraph.Security under the Bond Indenture. The Series 2008A Bonds will be issued pursuant to the BondIndenture. Payment of Bond Service Charges on the Series 2008A Bonds will be secured by (i) an assignment of theHospital Receipts, consisting of Basic Rent and the money and investments on deposit in the Special Funds createdunder the Bond Indenture and (ii) all right, title and interest of the Commission in the Special Funds establishedunder the Bond Indenture. The assignment and security interest granted by the Commission in the Hospital Receiptsmay be subject to limitations on enforceability and may be subordinated by operation of law to the interests andclaims of others in certain instances. See “BONDHOLDERS’ RISKS — Enforcement of Remedies; Risks ofBankruptcy” and “– Certain Matters Relating to Enforceability of Security Interest in Gross Receipts.”The Series 2008A Bonds, the Variable Rate Bonds and any other bonds hereafter issued pursuant to theBond Indenture are, except as otherwise provided therein, secured on a parity basis by the Bond Indenture. Uponissuance of the Series 2008A Bonds and the Variable Rate Bonds, they will be the only Bonds outstanding under theBond Indenture.Security under the State Financing Lease. Pursuant to a Lease dated as of September 1, 2008 with theCommission (the “State Financing Lease”), the Cleveland Clinic will covenant and agree to pay (i) as Basic Rent forthe property subject to the State Financing Lease (the “Leased Premises”), an amount equal to the Bond ServiceCharges on the Bonds outstanding under the Bond Indenture, including the Series 2008A Bonds and the VariableRate Bonds, (ii) the purchase price of any tendered Variable Rate Bonds that are not timely remarketed and (iii)certain additional amounts payable under the State Financing Lease. The obligation of the Cleveland Clinic to paythe Basic Rent and other amounts payable under the State Financing Lease will be absolute and unconditional,subject to limitations described herein. See “SECURITY FOR THE SERIES 2008A BONDS” and“BONDHOLDERS’ RISKS — Enforcement of Remedies; Risks of Bankruptcy.”In connection with the issuance of the County Bonds, the Cleveland Clinic has previously leased a portionof the property comprising the Leased Premises to the County pursuant to a lease agreement and amendments andsupplements thereto (the “County Base Lease”), and the County has leased that property back to the ClevelandClinic pursuant to a financing lease agreement and amendments and supplements thereto (the “County FinancingLease”). The County has assigned its right to payment of rent and certain additional payments under the CountyFinancing Lease to the County Bond Trustee, and has assigned substantially all of its other rights under the CountyFinancing Lease, together with its rights under the County Base Lease, to the Master Trustee. As a result, except for3
- Page 1 and 2: NEW ISSUEBOOK ENTRY ONLYSee “RATI
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- Page 5: OFFERING CIRCULARRelating to$452,34
- Page 9 and 10: Upon issuance of the Series 2008A B
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- Page 23 and 24: ESTIMATED SOURCES AND USES OF FUNDS
- Page 25 and 26: DEBT SERVICE COVERAGEThe following
- Page 27 and 28: MedicareGeneralApproximately 29% of
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- Page 35 and 36: Federal Regulatory and Contractual
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- Page 39 and 40: party or for any services rendered
- Page 41 and 42: typically in a position to refer pa
- Page 43 and 44: OhioOhio Certificate of Need Progra
- Page 45 and 46: performance demonstration programs
- Page 47 and 48: manifest injustice would otherwise
- Page 49 and 50: and properties owned or operated by
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Indenture and on any outstanding Master Notes, and other entities may be<strong>com</strong>e <strong>Obligated</strong> Issuers and jointly andseverally liable under the Master Trust Indenture, including with respect to Master Notes previously or thereafterissued under the Master Trust Indenture, all as provided in the Master Trust Indenture. See “APPENDIX C —SUMMARY OF BASIC DOCUMENTS — The Master Trust Indenture — The Combined <strong>Group</strong>.” The <strong>Cleveland</strong><strong>Clinic</strong> has covenanted, however, that it will not withdraw from the <strong>Obligated</strong> <strong>Group</strong> as long as the Series 2008ABonds are outstanding.The Huntington National Bank, Columbus, Ohio, is acting as bond trustee and paying agent with respect tothe Series 2008A Bonds, as bond trustee for the Variable Rate Bonds (as hereinafter defined) and as Master Trusteeunder the Master Trust Indenture. The Huntington National Bank also serves as bond trustee (in such capacity, the“County Bond Trustee”) under the Bond Indenture dated as of June 15, 1987, as amended and supplemented (the“County Bond Indenture”), pursuant to which certain outstanding revenue bonds to be refunded by a portion of theSeries 2008A Bonds were issued by the County of Cuyahoga, Ohio (the “County”).See “APPENDIX A — PART II. OBLIGATED GROUP” for a description of the <strong>Obligated</strong> Issuers, theirfacilities and their operations. APPENDIX B also includes certain audited financial statements of the <strong>Cleveland</strong><strong>Clinic</strong> and its controlled affiliates, including the other <strong>Obligated</strong> Issuers and certain other corporations that are not<strong>Obligated</strong> Issuers (collectively, the “<strong>Cleveland</strong> <strong>Clinic</strong> <strong>Health</strong> <strong>System</strong>”).Although the <strong>Cleveland</strong> <strong>Clinic</strong>, CCHS- East Region, Fairview, Lutheran, Marymount and Florida <strong>Clinic</strong> arethe only <strong>Obligated</strong> Issuers under the Master Trust Indenture, the <strong>Cleveland</strong> <strong>Clinic</strong> controls several other entities thatoperate health care facilities. See “APPENDIX A — PART V. NON-OBLIGATED HEALTH SYSTEMPARTICIPANTS.”Concurrent IssuesConcurrent with the issuance of the Series 2008A Bonds, the State is expected to issue, acting by andthrough the Commission, its $670,000,000 Hospital Revenue Bonds, Series 2008B (<strong>Cleveland</strong> <strong>Clinic</strong> <strong>Health</strong> <strong>System</strong><strong>Obligated</strong> <strong>Group</strong>) in one or more series or subseries (collectively, the “Variable Rate Bonds” and, together with theSeries 2008A Bonds, the “Series 2008 Bonds”) to provide additional financing for the purposes for which the Series2008A Bonds are being issued. The Variable Rate Bonds will bear interest at variable rates of interest per year,including, initially, daily, weekly and <strong>com</strong>mercial paper rates. The Variable Rate Bonds will be subject to optionaltender at the option of their holders, as well as mandatory tender under certain circumstances. The payment of theprincipal of and interest on the Variable Rate Bonds, and the purchase price for optionally or mandatorily tenderedVariable Rate Bonds, will be the obligation of the <strong>Cleveland</strong> <strong>Clinic</strong> under the State Financing Lease and of each<strong>Obligated</strong> Issuer under a promissory note to be issued under the Master Trust Indenture to secure that obligation andthe obligation of the <strong>Cleveland</strong> <strong>Clinic</strong> to make payments under the State Financing Lease in amounts and at timessufficient to pay Bond Service Charges on the Variable Rate Bonds (the “Variable Rate Note”). No liquidity facilityfrom a financial institution will be available to make any payment of such purchase price. The Variable Rate Bondswill be issued pursuant to and secured on a parity basis with the Series 2008A Bonds by the Bond Indenture.Use of ProceedsThe net proceeds of the Series 2008 Bonds, together with funds held by the Bond Trustee for the benefit ofthe hereinafter defined Bonds to be Refunded and the proceeds of the Variable Rate Bonds, will be used to (i) pay,or reimburse the <strong>Cleveland</strong> <strong>Clinic</strong> for the cost of acquiring, constructing, equipping and otherwise improving certainfacilities of the <strong>Cleveland</strong> <strong>Clinic</strong> and certain of its controlled affiliates, (ii) refund several series of outstandingrevenue bonds issued by the County under the County Bond Indenture (as hereinafter more particularly described,the “Bonds to be Refunded”) and (iii) pay costs relating to the issuance of the Series 2008 Bonds and the refundingof the Bonds to be Refunded. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OFFUNDS.”2
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