Fitch Ratings has placed the following bonds currently rated 'BBB+'
issued on behalf of Berkshire Health System (BHS) on Rating Watch
Evolving:
--$89,846,749 Massachusetts Development Finance
Agency revenue bonds series 2012G;
--$31,079,664 Massachusetts
Health and Educational Facilities Authority revenue bonds series 2005F.
The bonds previously had a Positive Outlook.
SECURITY
Debt payments are secured by a pledge of the gross
revenues of the obligated group and a mortgage pledge on the core
Berkshire Medical Center (BMC) campus The legal requirements include a
liquidity covenant of 65 days cash on hand (DCOH). The BHS obligated
group represented 96% of BHS's fiscal 2013 (Sept. 30 year end) assets
and 92% of revenues.
RATING SENSITIVITIES
STRATEGIC DIRECTION UNDER REVIEW: The rating has been put on Rating Watch Evolving as BHS reviews its strategic options with respect to the recent bankruptcy of North Adams Regional Hospital, located in BHS's service area. BHS is working with governmental agencies and other interested parties to evaluate healthcare delivery options for the Northern Berkshires community. Fitch expects to meet with BHS once it has identified a likely strategic direction and will take rating action as necessary. Fitch notes that BHS reported solid coverage of maximum annual debt service of 4.7x for the fiscal year ended Sept. 30, 2013 which was consistent with budgeted expectations.
CREDIT PROFILE
The Evolving Watch indicates that the rating on BHS's debt could be affirmed, raised or lowered. Berkshire Health System operates two acute care hospitals: Berkshire Medical Center in Pittsfield, MA (40 miles east of Albany) with 284 available acute care beds, and Fairview Hospital in Great Barrington (MA), 20 miles south of Pittsfield, a critical access hospital with 24 available acute care beds. BHS had $428 million in total operating revenue in fiscal 2012. BHS covenants to provide annual and quarterly financial disclosure through the MSRB's EMMA system.
For additional information, please see Fitch's press release: 'Fitch Affirms Berkshire Health System's (MA) Revs at 'BBB+'; Outlook Revised to Positive' dated April 22, 2013.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'U.S. Nonprofit
Hospitals and Health Systems Rating Criteria', May 20, 2013;
--'Revenue-Supported
Rating Criteria', June 3, 2013.
Applicable Criteria and Related Research:
U.S. Nonprofit Hospitals
and Health Systems Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708361
Revenue-Supported
Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709499
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827216
ALL
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Contacts:
Primary Analyst:
Eva Thein, +1-212-908-0674
Senior
Director
Fitch Ratings, Inc.
33 Whitehall St.
New York,
NY 10004
or
Secondary Analyst:
Emily E. Wadhwani,
+1-312-368-3347
Director
or
Committee Chairperson:
James
LeBuhn, +1-312-368-2059
Senior Director
or
Media
Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com