Fitch Ratings assigns ratings of 'AA-/F1+' to the $60,000,000 California Health Facilities Financing Authority variable rate revenue bonds (Scripps Health), series 2010B and $40,000,000 California Health Facilities Financing Authority variable rate revenue bonds (Scripps Health), series 2010C. The ratings are based on the support provided by two separate irrevocable direct-pay letters of credit (LOC) issued by JPMorgan Chase Bank for the series 2010B and Barclays Bank plc for the series 2010C.
The banks are obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The ratings will expire upon the earliest of: (a) Feb. 4, 2014 (series 2010B) and Feb. 4, 2013 (series 2010C), the initial stated expiration date of each LOC, unless such date is extended; (b) conversion to a two-day, commercial paper or long-term interest rate mode (for the series 2010B) and conversion to a daily, commercial paper or long-term interest rate mode (for the series 2010C); (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOCs provide full and sufficient coverage of principal plus an amount equal to 47 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the weekly and daily rate modes for the series 2010B and while in the weekly and two-day rate modes for the series 2010C. The Remarketing Agent for the series 2010B bonds is JPMorgan Securities Inc. and for the series 2010C bonds is Barclays Capital, Inc. The bonds are expected to be delivered on or about Feb. 4, 2010.
Each series of bonds initially bear interest at a weekly rate, but may be converted to a daily, two-day, commercial paper or long-term rate. While bonds bear interest in the weekly rate mode, interest payments are on the first Wednesday of each month, commencing March 3, 2010. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested, and are free from any lien prior to that of the bondholders.
Holders may tender their bonds on any business day, provided the trustee and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the LOC; (3) following receipt of written notice from the bank of an event of default under the LOC and reimbursement agreement, and (4) following receipt of notice from the bank that the interest component will not be reinstated directing such mandatory tender. The bank has the option of directing an acceleration rather than a mandatory tender upon an event of default under the LOC and reimbursement agreement or non-reinstatement of LOC interest. The bonds shall be accelerated following trustee's receipt of notice of an event of default under the LOC and reimbursement agreement and non-reinstatement of the LOC interest. Optional and mandatory redemption provisions also apply to the bonds. There are no provisions for the issuance of additional bonds.
Bond proceeds will be used to finance the acquisition, construction, equipping and improvement of certain facilities owned and operated by the Scripps Health.
Applicable criteria available on Fitch's website at www.fitchratings.com:
--'U.S. Municipal Structured Finance Rating Criteria', (Dec. 17, 2009);
--'Rating Guidelines for Letter of Credit-Supported Bonds', (April 29, 2009).
Additional information is available at www.fitchratings.com.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
Contacts:
Fitch Ratings
Mario Civico, +1-212-908-0796, New York (for
information on the series 2010 B & C bonds)
Michael Borgani,
+1-415-732-5620, San Francisco (for information on Scripps Health)
Media
Relations:
Cindy Stoller, +1-212-908-0526, New York
cindy.stoller@fitchratings.com
