$20,570,000
Michigan State Hospital Finance Authority
Hospital Revenue Bonds
December 1995

This combination refunding and new-money issue featured the issuance of weekly-mode variable-rate demand obligations backed by a letter of credit. In addition to the overall coordination and "quarterbacking" of the financing process, First River Advisory was primarily responsible for the negotiation of:

• a 40% reduction in the underwriter's initial fee proposal, plus the waiver of the remarketing agent's fee for the first year for an aggregate savings to Chelsea Community of over $65,000, well in excess of the financial advisory fee;
• a rare formal commitment by the remarketing agent to hold unremarketed bonds for 30 days before drawing on the letter of credit;
• a reduced annual fee for the remarketing agent of bonds being refunded, a savings of approximately $8,000;
• a longer, more flexible amortization schedule than that associated with the bonds being refunded;
• more appropriate and flexible covenants imposed by the letter of credit bank; and
• the independent auditor's "agreed-upon procedures" in a manner which minimized the auditor's involvement and, consequently, the cost to Chelsea Community.

First River Advisory's role in this transaction extended beyond the traditional capital formation function. As noted in the following examples of value-added services, the firm ensured that the financing would promote Chelsea Community's strategic and financial planning objectives.

• First River Advisory ensured that all terms, conditions and covenants would not interfere with other business ventures contemplated by Chelsea Community. Such ventures included the development of off-campus primary care practice sites, a medical office building and a senior living community. Because First River Advisory also served as Financial Advisor to Silver Maples of Chelsea (as described below), a corporate affiliate of Chelsea Community and the developer of the senior living community, one of the firm's responsibilities was the coordination of the two organizations' financings.
• First River Advisory advised the client to incorporate into the financing capital assets such as automobiles which would be needed to operate a home care agency. At the time, the acquisition of the home care agency was only in exploratory stages. First River Advisory also provided advisory services with respect to this acquisition.
• First River Advisory drafted the request letter which secured the required certificate of need waivers within one business day.