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Fitch rates Forrest General bonds

HATTIESBURG — Fitch Ratings has assigned an “A” rating to the expected issuance of the $44.99-million Mississippi Hospital Equipment and Facilities Authority’s series 2009 refunding bonds issued for the benefit of Forrest General Hospital (FGH). Fitch also affirms the rating on the hospital’s outstanding series 2007 and 2000 bond issues. The rating outlook is “stable.”

Bond proceeds will be used to current refund the hospital’s outstanding series 2007 bond issue, fund the termination payment associated with a swap issued in conjunction with the series 2007 bond issue, and pay for costs of issuance. The bonds will be issued as unenhanced fixed-rate bond issue, on parity with existing hospital debt and secured by a general obligation of the hospital under the bond documents.

Fitch wrote: “The rating is supported by the FGH’s continued strong market share position, strong recovery in profitability for fiscal year 2009 and a manageable debt burden defined as maximum annual debt service as a percentage of revenues.

“Operating performance has improved dramatically in fiscal 2009. After suffering significant operating losses in fiscal 2007 followed by a solid recovery in fiscal 2008, FGH expects to end fiscal 2009 with strong profitability ratios and excellent coverage primarily due to increases in DSH/UPL reimbursement monies, strong expense control and revenue cycle enhancements.

“For the 10-month interim period ending July 31, 2009, FGH earned $28.7 million from operations (7.5 percent operating margin) and $32 million in excess earnings (8.4 percent excess margin), which compare favorably to Fitch medians for category of 2.7 percent and 3.2 percent, respectively.”


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