$47 million restructuring and acquisition transaction for national senior living provider

We acted as bond counsel for Bethesda Associates, a Colorado based national senior living provider. This transaction contained (i) restructuring an existing $23 million tax exempt bond to take advantage of new, more advantageous repayment terms and (ii) financing the acquisition of two new assisted living facilities through a second cross–collateralized $24 million tax exempt bond. Both bonds were purchased by a single bank.

We created a new Master Trust Indenture as part of our engagement which permitted Bethesda to treat the 2014 Bonds on a parity basis and also gave it the ability to enter into new financings in the future on a parity basis with the 2014 Bonds. The bank, which owned the old bonds, offered new, advantageous loan terms to our client. However, it was critical to avoid a reissuance of the old bonds for tax purposes when implementing the changes, because public hearings would have been required under the Internal Revenue Code in Arizona, Indiana, Missouri, Texas, and two locations in Nebraska.

We worked with the bank purchaser to extend the bank holding period for the old bonds but without extending the bond maturity. We were able to lower the interest rate within IRS guidelines avoiding the reissuance. We also advised the bank relative to its written commitments to purchase the bonds in order to keep the two bond issues separate for tax purposes, as well as making sure the existing swap agreements were integrated into the new bond issue.