MCG Hospital boards vote to take out $50 million loan

$50 million will fund capital projects for health system

Wanting to take advantage of “extraordinarily favorable” interest rates, the boards overseeing Medical College of Georgia Hospital and Clinics voted Wednesday to take out a $50 million loan for future capital projects.

The rate for the loan will be set at closing with the bank BB&T, but it is expected to be about 2.5 percent, said Greg Damron, the interim Chief Financial Officer for the health system.

“Given that the rates are so low now, it’s almost a shame not to finance part of our future capital (spending),” he said.

The system already held about $132 million in variable rate debt, so that was one motivation to go with fixed-rate debt, Damron said.

“This is to diversify ourselves a little bit away from the variable rate debt,” he said.

The health system normally needs anywhere from $37 million to $45 million a year in capital projects that are often funded out of cash, and the low rates made the loan a better deal, said Georgia Health Sciences University President Ricardo Azziz, who serves as CEO of the health system.

“This is an extraordinarily favorable rate to us,” he said. “This recommendation will allow us to preserve cash and maintain our cash flow in the short term.”

Considering the annual capital needs, the loan is not a big step, Azziz said.

“$50 million is actually not a significant amount of monies over the near-term to maintain our capital projects within the medical center,” he said.

A list of the projects is still being compiled but it will probably be 2012-13 projects, Damron said.

In addition to unanimously approving the loan, the boards voted unanimously to switch two letters of credit from Bank of America to BB&T and JPMorgan Chase. The more favorable terms on those letters of credit should save the health system about $170,000 a year, Damron said.

More

Fri, 12/02/2016 - 10:01

Barnwell superintendent resigning