refinancing generates enhanced cash flow and provides more flexible covenants

AAHSA Headquarters

The entire refinancing was secured by letters of credit from Sovereign Bank to enhance the tax-exempt and taxable series of variable rate bonds issued in 1999. Both series of variable rate bonds were swapped to a fixed rate for seven years.

The refinancing meets two key AAHSA objectives: (1) generating annual cash flow savings, and (2) providing flexible covenants to support AAHSA’s diverse operational needs and unique business cycle. The refinancing will accomplish both of these objectives by generating more than $315,000 in average annual savings during the initial five-year term of the letter of credit, along with low debt service coverage and liquidity requirements, and by allowing for additional indebtedness to upgrade AAHSA’s IT infrastructure. In addition, the refinancing released to AAHSA approximately $650,000 in reserves required under the 1999 financings.

Larry Minnix, AAHSA’s President & CEO noted, “Herbert J Sims has specialized in serving the financing needs of the not-for-profit long term care field for two generations. As AAHSA evaluated how we can deliver value to our members by using dues and other support dollars that our members give to help them serve the elderly, Sims stepped forward to evaluate our original financing and offer cost beneficial alternatives that reinforce AAHSA’s financial health and provide for future flexibility in a rapidly changing aging services environment. We could not be more pleased with the outcome.”