NJHCFFA RESPONDS TO AUCTION RATE CRISIS TO HELP BORROWERS

(Trenton)  In January of 2008, the New Jersey Health Care Facilities Financing Authority (the "Authority") saw the auction rate market was struggling and borrowers nation-wide were beginning to experience "failed auctions." When an auction fails, interest rates are set at levels defined in the bond documents, and in many cases that means jumping to the maximum levels of up to 12%, 15%, or even 18%.  Having seven borrowers with whom the Authority had outstanding auction rate debt, the Authority quickly searched for methods to ease the burden on these borrowers by simplifying the processes of exiting the auction rate market. 

On February 28, 2008, the Authority Members approved a resolution which allows an authorized officer of the Authority to approve the actions needed to convert auction rate securities to another structure permitted in the issuance documents.  "The conversion can now be completed without waiting for the Authority Members to take a formal action at a monthly meeting," says Dennis Hancock, Deputy Executive Director and Director of Project Management, "which allows the borrowers to complete the conversions more quickly."

For some Authority borrowers, however, conversion is not the preferred option.  Borrowers seeking to exit the auction rate market can refund auction rate bonds through a new issuance under a new interest structure.  The Authority has been working closely with borrowers interested in such a refinancing, and has even scheduled special meetings in addition to the scheduled monthly meetings in order to best accommodate them.  As of March 18, 2008, the following Authority borrowers are in the process of refunding their auction rate debt: Atlantic Health System, Hackensack University Medical Center, and Underwood Memorial Hospital.

The four remaining Authority borrowers with outstanding auction rate debt are: Meridian Health System, Robert Wood Johnson at Hamilton, Saint Barnabas Health Care System, and CentraState Medical Center.  Bondholders seeking more information on these borrowers should reference the Nationally Recognized Municipal Securities Information Repositories ("NRMSIRs") for secondary disclosure filings.  The names and addresses of the four NRMSIRs are listed on the Authority's website www.njhcffa.com under the "Bondholder Information Resources" link. 

"The Authority Members realize the need for our borrowers affected by the auction rate crisis to react quickly," says Mark Hopkins, Executive Director, "we expect that the actions taken recently will accommodate those borrowers noted."

Created in 1972 by an act of the Legislature to provide not-for-profit health care providers with access to low-cost capital, the Authority is the primary issuer of municipal bonds for New Jersey's health care organizations. During its 30+-year history, the Authority has issued over $12 billion in bonds on behalf of over 140 health care organizations throughout the state.

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