Refinancing Aids Hospital District

The Antelope Valley Healthcare District announced Tuesday that it has refinanced its debt into a fixed-rate, long-term public bond issue that will improve the district’s financial flexibility. The district, a subdivision of the state and which operates similar to a school district, owns the Antelope Valley Hospital in Lancaster. The district’s new $140 million in bond money will reach final maturity in 2046 and has a net interest cost of less than 5 percent. It will pay off all the district’s debt, including a balloon payment that was due next year. The new agreement also allowed the district to reduce its cash-on-hand requirement and close a line of credit. “We are now better positioned than ever to fund the kind of ongoing operations, select capital projects and new programmatic needs that will allow our hospital to keep up with the demands of our growing population,” Dr. Doddanna Krishna, chairman of the board at AVHD, said in a statement. According to a report on the refinancing last month by Moody’s Investors Service, the district enjoys a very strong market position with only one small competitor, but its operating performance has been weak and volatile in recent years. It suffers from high turnover of senior management that appears to be at least partly due to a difficult working relationship with the district’s board, and it has a significantly underfunded defined benefit pension plan. For those reasons and others, Moody’s assigned the new bonds a non-investment grade rating of Ba3 with a negative outlook.