Sims Represents Client in Debt Restructuring
and Subsequent Refinancing
“Our refinancing was a very complicated process with many bumps and twists and turns on the road. Sims helped smooth out those bumps and was a key player in getting it done.”
– Ed Soucy, Chief Financial Officer, Taylor Community
Taylor Community is a non‐profit Life Plan Community with its main campus in Laconia, New Hampshire, part of New Hampshire’s attractive Lakes Region known as a favorite resort and retirement destination. A presence in Laconia since 1907, Taylor is located on 104 acres and comprises 122 independent living cottages, 57 independent living apartments, 46 assisted living residences, 8 memory care apartments and 35 nursing beds.
In 2005 Taylor issued approximately $27 million in variable rate tax exempt bonds supported by a bank letter of credit with proceeds used to refinance existing debt and finance construction of additional independent living apartments on the campus. The real estate downturn beginning in 2008 led to significant operating losses and frequent debt covenant violations.
HJ Sims worked with management to negotiate a restructuring of the 2005 debt and associated interest rate swaps. In 2014 an agreement was reached with the existing bank to convert the bonds into several term loans which paid debt service with either operating cash flow or excess cash flow. HJ Sims also represented Taylor in negotiating the termination of third party interest rate swaps.
Steadily improving financial performance bolstered by increased independent living occupancy created a window of opportunity to seek term sheets to refinance the restructured debt. Despite stronger results, the stabilized cash flow was below the initial forecasted amount, making a complete refinancing unlikely. HJ Sims assisted management in reaching an agreement with the existing bank to accept an approximate 15% discount in the amount it was owed.
After a wide-ranging request for proposal process, a local bank with a historic relationship with Taylor was selected to act as lead bank in a $17.5 million direct bond placement, bringing two other banks in as participants.
On December 22, 2016 the new bond issue closed with a fixed interest rate of 3.75% for a 10-year period. In addition to lower principal, the interest rate is lower than the 5% Taylor was required to pay on the refinanced debt, further reducing the debt service burden for the community.
For more information on how Taylor Community was Financed Right® by HJ Sims, please contact: