MCG Hospital boards vote to take out $50 million loan

$50 million will fund capital projects for health system

Wednesday, May 30, 2012 5:55 PM
Last updated 10:17 PM
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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.

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blues550
353
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blues550 05/30/12 - 06:55 pm
0
0
Duh!
Unpublished

No better time and they'd be fools not to.

Sweet son
9682
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Sweet son 05/30/12 - 08:04 pm
1
2
Axxix!

You are going to spend OUR money anyway. We appreciate you getting loans with a low interest rate. He hasn't got a clue!

Jake
31665
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Jake 05/30/12 - 08:36 pm
2
0
Not too bad

Actually borrowing money on a low interest rate is a pretty good idea. I think Dr Azziz is a visionary. The proof for my opinion is the negative comments about him in the CSRA. It's time a lot of you joined the 21st century.

You guessed it...Frank Stallone
83
Points
You guessed it...Frank Stallone 05/30/12 - 10:14 pm
2
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Here they come..

Cue the predictable Augusta residents using the comments section to complain about everything. Without GHSU, along with Fort Gordon, Augusta goes bye bye completely. But that fact doesn't fit the agenda of "I hate everything" crowd I guess.

JohnBrownAug
1962
Points
JohnBrownAug 05/31/12 - 07:44 am
1
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I see nothing wrong with the

I see nothing wrong with the low interest loan, but I'm generally opposed to all government borrowing. Yeah, unrealistic in these day and times, I realize.

twentieth century man
102
Points
twentieth century man 05/31/12 - 09:59 am
1
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interest rate swaps

The interest rate swaps are a legacy of the previous administration. At the time they were thought to be a safe vehicle. The concept of low fixed-rate financing is laudable, however.

Sweet son
9682
Points
Sweet son 05/31/12 - 01:06 pm
1
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@jake and you guessed it

Everyone in the current economy has had to throttle back a bit. At least that has happened at our house. So I suppose if you follow I am a bit hard on Dr. Azziz but he probably makes $1million a year plus a house and other expenses. Granted he has a lot of responsibility but he at least needs to be cognizant of the people under him who make him look good and fight for them as much as he fights for capital additions.

Skooter
64
Points
Skooter 05/31/12 - 08:36 pm
1
0
expansion is good

but it is thought-provoking to know that state employees haven't had a raise in the last 4 years nor is there one budgeted for next year either so that's 5 years in a row. It is difficult to attract and maintain quality staff under such circumstances.
We hear so many money woes in the airline industry but Delta is providing pilots with an immediate 4% raise, 8.5% raise in January and 3% each of the following 2 years.

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