MORGAN KEEGAN & COMPANY, INC.

Transcription

1 NEW ISSUE BOOK ENTRY ONLY RATING: S&P BBB+ In the opinion of Bond Counsel, under existing laws, regulations, rulings, and judicial decisions, assuming the accuracy of certain representations and continuing compliance with certain covenants described in TAX EXEMPTION herein, interest on the Bonds (i) is excluded from gross income for federal income tax purposes and (ii) is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that, under existing laws of the Commonwealth of Kentucky, interest on the Bonds is excluded from the gross income of the recipients thereof for Kentucky income tax purposes and the Bonds are exempt from ad valorem taxes by the Commonwealth of Kentucky and all political subdivisions thereof. See Tax Exemption herein. Dated: Date of Issuance $30,885,000 COUNTY OF WARREN, KENTUCKY HOSPITAL REFUNDING REVENUE BONDS, SERIES 2007A (BOWLING GREEN-WARREN COUNTY COMMUNITY HOSPITAL CORPORATION PROJECT) Due: As Shown on Inside Cover The County of Warren, Kentucky (the Issuer ) will issue $30,885,000 of its Hospital Refunding Revenue Bonds, Series 2007A (Bowling Green-Warren County Community Hospital Corporation Project) (the Bonds ) to (1) currently refund $28,875,000 of the Issuer s Variable Rate Demand Hospital Revenue Bonds, Series 2001 (Bowling Green-Warren County Community Hospital Corporation Project) (the Prior Bonds ) that were issued to (i) finance (a) construction of a new emergency services department at the Medical Center at Bowling Green, a general acute care hospital located in Bowling Green, Kentucky licensed for 327 beds, with 250 beds in use (the Hospital ), (b) construction of a new surgery service component within the Hospital, (c) construction and equipping a new diagnostic services area, and (d) certain site development, (ii) pay letter of credit fees relating to the Prior Bonds, and (iii) pay costs of issuing the Prior Bonds, (2) fund a debt service reserve fund for the Bonds, and (3) pay costs of issuing the Bonds. The Hospital is owned by Bowling Green-Warren County Community Hospital Corporation, a Kentucky nonprofit corporation and an exempt organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Corporation ). The Bonds will be issued pursuant to the terms of an Indenture of Trust, dated as of March 1, 2007 (the Bond Indenture ), by and between the Issuer and Branch Banking and Trust Company, as trustee (the Bond Trustee ). The Bonds will be special and limited obligations of the Issuer payable solely from and secured by a pledge of payments to be made under the Loan Agreement, dated as of March 1, 2007 (the Loan Agreement ), between the Corporation and the Issuer, and from certain funds and the investment income thereon held by the Bond Trustee under the Bond Indenture. The Bonds are also secured by the Series 4 Note (the Series 4 Note ) issued by the Corporation, as the sole member of an obligated group (the Obligated Group ), to the Bond Trustee pursuant to a Master Trust Indenture, dated as of January 15, 1998 (the Master Trust Indenture ), between the Corporation and such other organizations as from time to time are members of the Obligated Group (collectively, the Members of the Obligated Group ) and Branch Banking and Trust Company, as successor master trustee (the Master Trustee ), and Supplemental Master Trust Indenture No. 4 dated as of March 1, 2007 (the Series 4 Note Indenture ), between the Corporation and the Master Trustee. The Series 4 Note will be secured by a pledge of Revenues of the Corporation, shared on a parity basis with the holders of all other notes issued and hereafter issued under the Master Trust Indenture, including the Series 1 Note issued to secure the Issuer s Hospital Revenue Bonds, Series 1998 (Bowling Green-Warren County Community Hospital Corporation), of which $48,145,000 in aggregate principal amount is currently outstanding. The Bonds will be issued in fully registered form, registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Bonds. Individual purchases of beneficial ownership interests in the Bonds will be made in book-entry form only and individual purchasers will not receive physical delivery of bond certificates. The Bonds will be issued as fully registered bonds in the denominations of $5,000 and any multiple thereof. Interest on the Bonds will be payable on August 1, 2007, and thereafter semi-annually on each February 1 and August 1. So long as DTC or its nominee, Cede & Co., is the Bondholder, such payments will be made to Cede & Co., which in turn will remit such payments to the DTC Participants (as defined herein) and DTC Indirect Participants (as defined herein) for subsequent disbursement to the beneficial owners of the Bonds. THE BONDS ARE SPECIAL AND LIMITED OBLIGATIONS OF THE ISSUER PAYABLE, WITH RESPECT TO THE ISSUER, SOLELY FROM THE PLEDGED REVENUES, AS DEFINED IN THE BOND INDENTURE. THE BONDS DO NOT CONSTITUTE AND SHALL NOT BE A DEBT OF THE COMMONWEALTH OF KENTUCKY OR THE COUNTY OF WARREN, KENTUCKY, AND NEITHER THE COMMONWEALTH OF KENTUCKY NOR THE COUNTY OF WARREN, KENTUCKY SHALL BE LIABLE THEREON. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF WARREN OR THE COMMONWEALTH OF KENTUCKY, OR ANY OTHER POLITICAL SUBDIVISION OF THE COMMONWEALTH OF KENTUCKY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. The Bonds are offered when, as, and if issued by the Issuer and received by the Underwriter and are subject to prior sale and the approval of legality by Kutak Rock LLP, and to certain other conditions. Certain legal matters will be passed on for the Issuer by its counsel, Amy Hale Milliken, Esquire, Warren County Attorney, for the Corporation by its counsel, English, Lucas, Priest & Owsley, LLP, Bowling Green, Kentucky, and for the Underwriter by its counsel, Peck, Shaffer & Williams LLP. Delivery of the Bonds to the Bond Trustee on behalf of DTC under the DTC FAST system of registration is expected on or about March 15, This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. MORGAN KEEGAN & COMPANY, INC. Dated: February 27, 2007

2 MATURITY SCHEDULE Maturity Principal Interest (August 1) Amount Rate Yield CUSIP 2007 $ 820, % 4.03% BS , % 4.05% BT , % 4.09% BU , % 4.12% BV , % 4.15% BW , % 4.17% BX , % 4.19% BY , % 4.21% BZ , % 4.23% CA , % 4.27% CB ,045, % 4.30% CC ,095, % 4.37% CD7 $3,635, % Term Bonds due August 1, 2021, Priced to Yield: 4.42%, CUSIP CG0 $7,415, % Term Bonds due August 1, 2026, Priced to Yield: 4.50%, CUSIP CM7 $5,425, % Term Bonds due August 1, 2029, Priced to Yield: 4.54%, CUSIP CQ8 $4,075, % Term Bonds due August 1, 2031, Priced to Yield: 4.64%, CUSIP CS4 The Bonds have not been registered under the Securities Act of 1933, as amended, and the Master Indenture and the Bond Indenture have not been qualified under the Trust Indenture Act of 1939, as amended, in reliance on exemptions contained in such Acts. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any state in which it shall be unlawful for such person to make such offer, solicitation, or sale. No dealer, broker, salesman, or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representation should not be relied upon as having been authorized by the Issuer, the Corporation, or the Underwriter. The information set forth herein has been obtained from the Corporation, and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of, the Underwriter. The Issuer takes no responsibility as to the accuracy or completeness of the information contained in this Official Statement other than that under the heading THE ISSUER and under the heading LITIGATION The Issuer. The information contained herein is subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the Issuer or the Corporation since the date hereof. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. CERTAIN STATEMENTS CONTAINED IN THIS OFFICIAL STATEMENT REFLECT NO HISTORICAL FACTS, BUT FORECASTS AND FORWARD-LOOKING STATEMENTS. IN THIS RESPECT, THE WORDS ESTIMATE, PROJECT, ANTICIPATE, EXPECT, INTEND,

3 BELIEVE, AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD- LOOKING STATEMENTS. ALL PROJECTIONS, FORECASTS, ASSUMPTIONS, EXPRESSIONS OF OPINIONS, ESTIMATES, AND OTHER FORWARD-LOOKING STATEMENTS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. THE ISSUER HAS NOT REVIEWED OR APPROVED, AND DOES NOT REPRESENT OR WARRANT IN ANY WAY, THE ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO OTHER THAN THE STATEMENTS SET FORTH UNDER THE CAPTIONS SUMMARY (INSOFAR AS SUCH INFORMATION RELATES TO THE ISSUER), THE ISSUER and LITIGATION The Issuer. [Remainder of Page Intentionally Left Blank]

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5 TABLE OF CONTENTS SUMMARY... i INTRODUCTORY STATEMENT... 1 PLAN OF FINANCING... 1 THE ISSUER... 2 THE CORPORATION... 2 THE HOSPITAL... 3 THE BONDS... 3 General Terms... 3 Registration and Transfers... 3 Redemption of the Bonds Prior to Maturity... 3 Optional Redemption... 4 Sinking Fund Account Redemption... 4 Extraordinary Redemption... 5 Selection of Bonds to Be Redeemed... 5 Partial Redemption of Bonds... 6 Effect of Call for Redemption... 6 Notice of Redemption... 6 BOOK-ENTRY ONLY SYSTEM... 6 Use of Certain Terms in Other Sections of the Official Statement... 9 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS... 9 General... 9 Issuer Not Liable on the Bonds The Master Indenture and the Series 4 Note The Loan Agreement Days Cash on Hand Requirement Exchange of the Series 4 Note Enforceability of Remedies THE MASTER INDENTURE General Particular Covenants Additional Indebtedness Restrictions on Encumbering Revenues...12 Restrictions on Guaranties Limitations on Creation of Liens Limitation on Sale, Lease or Other Disposition of Property Debt Service Coverage Ratio Consolidation, Merger, Sale or Conveyance Financial Statements, Certificate of No Default, Other Information Amendments and Supplements to Master Indenture ESTIMATED SOURCES AND USES OF FUNDS PRINCIPAL AND INTEREST REQUIREMENTS RISK FACTORS General Bonds Are Limited Obligations Concerning the Financing Documents Certain Bankruptcy Risks There Is No Mortgage Securing the Bonds Voting Control Under the Master Indenture Liabilities in Excess of Insurance Additional Indebtedness Bond Ratings... 21

6 Market for the Bonds Financial Information Health Care-Related Investment Considerations Competitive Environment Regulatory Environment Health Care Reform Governmental Programs-The Medicare Program Medicaid Funding Antitrust Federal Fraud and Abuse Laws and Regulations Restrictions on Referrals Affiliation, Merger, Acquisition and Divestiture Physician Contracting and Relations Environmental Laws Affecting Health Care Facilities Accreditation General Factors Increased Costs Without a Comparable Increase in Revenue Limits on or Reductions in the Level of Support for Medicare and Medicaid Renewal of Accreditation or Medicare Certification or Licensure Environmental Laws Affecting Health Care Facilities Additional Risk Factors Maintenance of Exempt Status Tax Covenants Bond Audits LITIGATION The Issuer The Corporation TAX EXEMPTION Bonds Purchased at an Original Issue Discount Bonds Purchased at an Original Issue Premium UNDERWRITING RATING LEGAL MATTERS RELATIONSHIPS OF PARTIES FINANCIAL STATEMENTS CONTINUING DISCLOSURE MISCELLANEOUS APPENDIX A BOWLING GREEN-WARREN COUNTY COMMUNITY HOSPITAL CORPORATION... A-1 APPENDIX B COMBINED FINANCIAL STATEMENTS OF THE CORPORATION AS OF AND FOR THE YEARS ENDED MARCH 31, 2006, 2005, AND B-1 APPENDIX C UNAUDITED COMBINED BALANCE SHEETS AND COMBINED STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS OF THE CORPORATION AS OF AND FOR THE NINE MONTHS ENDED DECEMBER 31, 2006 AND C-1 APPENDIX D SUMMARIES OF CERTAIN LEGAL DOCUMENTS... D-1 APPENDIX E FORM OF BOND COUNSEL OPINION...E-1

7 SUMMARY This summary of certain aspects of this Official Statement is intended only for quick reference. The following summary is qualified in its entirety by reference to detailed information and statements appearing elsewhere in this Official Statement, including the Appendices hereto, all of which should be read in their entirety. Definitions... Capitalized words, not otherwise defined in this Official Statement, are defined under the heading DEFINITIONS OF CERTAIN TERMS in Appendix D hereto. The Issuer... The County of Warren, Kentucky (the Issuer ) is a county and political subdivision of the Commonwealth of Kentucky under the Constitution and laws of Kentucky. The Bonds are being issued under the authority of the Industrial Buildings for Cities and Counties Act, Sections through of the Kentucky Revised Statutes, as amended. See THE ISSUER herein. The Corporation... Bowling Green-Warren County Community Hospital Corporation (the Corporation ) is a nonprofit corporation organized and existing under the laws of the Commonwealth of Kentucky that has been recognized as an exempt organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ). See THE CORPORATION herein and BOWLING GREEN-WARREN COUNTY COMMUNITY HOSPITAL CORPORATION, Appendix A hereto. The Hospital... The facility being refinanced is a general acute care hospital licensed for 327 beds with 250 beds in use (the Hospital ) located on a 17 acre campus that includes a six-story approximately 298,000 square foot hospital building. The buildings on the campus contain a total of approximately 376,000 square feet of space. The Corporation also owns and operates The Medical Center at Scottsville, a 25-bed critical access hospital and 110 nursing care beds. These beds are located in a 76,000 square foot building on approximately 13 acres of land in Allen County, near Scottsville, Kentucky. The two facilities are operated as a single hospital under one license. References herein to the Hospital refers to the combined facilities. See THE CORPORATION and THE HOSPITAL herein and BOWLING GREEN-WARREN COUNTY COMMUNITY HOSPITAL CORPORATION, Appendix A hereto. The Bond Trustee... Branch Banking and Trust Company, Wilson, North Carolina (the Bond Trustee ), will act as trustee, paying agent, and bond registrar for the hereinafter defined Bonds. The Bonds... The Issuer will issue $30,885,000 in aggregate principal amount of its Hospital Refunding Revenue Bonds (Bowling Green-Warren County Community Hospital Corporation Project), Series 2007A (the Bonds ) to (1) currently refund $28,875,000 of the Issuer s Variable Rate Demand Hospital Revenue Bonds, Series 2001 (Bowling Green-Warren County Community Hospital Corporation Project) (the Prior Bonds ) that were issued to (i) finance (a) construction of a new emergency services department at the Hospital, (b) construction of a new surgery service component within the Hospital, (c) construction and equipping a new diagnostic services area, and (d) certain site development, (ii) letter of credit fees relating to the Prior Bonds, and (iii) costs (i)

8 of issuing the Prior Bonds, (2) fund a debt service reserve fund for the Bonds, and (3) pay costs of issuing the Bonds. See THE BONDS herein. The Bonds are being issued pursuant to an Indenture of Trust, dated as of March 1, 2007 (the Bond Indenture ), between the Issuer and the Bond Trustee. Debt Service Source... The Bonds are special and limited obligations of the Issuer payable from the Pledged Revenues held by the Bond Trustee under the Bond Indenture and from payments made by the Corporation under the Loan Agreement by and between the Issuer and the Corporation, dated as of March 1, 2007 (the Loan Agreement ). Under the Loan Agreement, the Corporation is required to make payments corresponding to the principal or redemption price of and interest on the Bonds. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF WARREN, KENTUCKY OR THE COMMONWEALTH OF KENTUCKY OR ANY OTHER POLITICAL SUBDIVISION OF KENTUCKY IS PLEDGED TO THE PAYMENT PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS and RISK FACTORS herein. Security for the Bonds... As additional security for the Bonds, the Corporation and such other organizations as from time to time may become members of an obligated group (the Obligated Group ) will issue its Series 4 Note (the Series 4 Note ) in the principal amount of $30,885,000 to the Bond Trustee pursuant to a Master Trust Indenture, dated as of January 15, 1998 (the Master Trust Indenture ), by and between the Obligated Group and Branch Banking and Trust Company, as successor Master Trustee (the Master Trustee ), and Supplemental Master Trust Indenture No. 4, dated as of March 1, 2007 ( Supplemental Master Indenture No. 4 ), by and between the Corporation and the Master Trustee. The Series 4 Note will be secured by a lien on the Revenues of the Corporation and any other members of the Obligated Group shared on a parity basis with the holders of other master indenture notes issued under the Master Trust Indenture, including the Series 1 Note (the Series 1 Note ) issued to secure the Issuer s Hospital Revenue Bonds, Series 1998 (Bowling Green-Warren County Community Hospital Corporation), of which $48,145,000 in aggregate principal amount is currently outstanding (the Series 1998 Bonds ). The Master Trust Indenture, as supplemented by the Series 1 Note, the Series 4 Note, and any other notes issued under the Master Trust Indenture is hereinafter referred to collectively as the Master Indenture. Payment of the Bonds is also secured by the Reserve Fund held by the Bond Trustee under the Bond Indenture (the Debt Service Reserve Fund ). The Debt Service Reserve Fund is required to be maintained in an amount equal to the Debt Service Reserve Fund Requirement, an amount equal to the lesser of (a) the Maximum Annual Debt Service on the Bonds Outstanding, (b) an amount equal to 10% of the proceeds of the Bonds Outstanding within the meaning of Section 145(d) of the Code and (c) an amount equal to 125% of the average annual debt service on the Bonds Outstanding. The Debt Service Reserve Fund will be initially funded in the amount $2,133,000 from proceeds of the Bonds. (ii)

9 Risk Factors... There are certain risk factors relating to an investment in the Bonds that are set forth herein under the heading RISK FACTORS which should be carefully reviewed by prospective buyers of the Bonds. These include the facts that (1) the Bonds are limited obligations of the Issuer and have only one significant source of payment, payments received by the Bond Trustee from the Corporation under the Loan Agreement and the Series 4 Note, (2) certain statutory provisions and interests and claims of others may impair the security interest of the Bond Trustee in the Revenues derived by the Corporation from its operation of the Hospital and judicial actions may impair the remedies available to the Bond Trustee and the owners of the Bonds under the Bond Documents (hereinafter defined) providing security for the Bonds, (3) if the Corporation were to file proceedings under the United States Bankruptcy Code, the remedies provided in the Bond Documents may not be readily available or may be limited, (4) there is no mortgage securing the Bonds, (5) the owners of the Bonds will not have voting control under the Master Indenture, (6) the Corporation is regularly involved in legal actions and there is the possibility of the Corporation incurring liabilities in excess of insurance coverages, (7) Additional Indebtedness, secured on a parity basis with the Bonds, may in the future dilute the security for the Bonds, (8) there is not assurance that the rating on the Bonds will be maintained, (9) there can be no guarantee that there will be a secondary market for the Bonds, (10) the Corporation may not be able to maintain the financial results shown in the financial statements that are included as appendices to this Official Statement, (11) there are a number of risk factors that relate to the heavy regulation of the health care industry by state and federal agencies and the sources of revenues that are primarily reimbursement under governmental programs and payment by insurers, health maintenance organizations, and preferred provider programs that limit revenues, (12) there are a number of other risk factors that generally affect health care institutions, over which the Corporation has no control, including the employees of the Corporation becoming subject to collective bargaining agreements which could result in increased labor costs for the Corporation, increased competition from other hospitals and other types of health care providers, demographic and economic changes, and natural disasters, (13) a change in the Corporation s status as a 501(c)(3) organization could cause the interest on the Bonds to become includable in the gross income of the owners thereof for federal income tax purposes, (14) the Corporation must comply with certain tax covenants for interest on the Bonds to remain excludable from the gross income of the owners thereof for federal income tax purposes, and (15) the Bonds may be subject to audit by the Internal Revenue Service. Pro Forma Debt Service Coverage... The following table, which is based on information provided by the Corporation, sets forth, for the fiscal years ended March 31, 2004, 2005 and 2006, the Debt Service Coverage Ratio of the Corporation, on a pro forma basis, assuming that the Bonds had been outstanding in place of the Prior Bonds during each of such years. For purposes of the computation, it is assumed that the Bonds are in the principal amount of $31,650,000 with a net interest cost of 4.88%. Debt service is calculated based on maximum annual debt service for the Series 1998 Bonds and the Bonds, however, the Debt Service Coverage Ratio requirement of the Master Indenture is based on actual debt service. (iii)

10 Net income... $ 4,909,010 $16,466,441 $ 8,121,464 Plus: depreciation, amortization, and interest... 14,614,200 16,889,274 13,414,806 Income Available for Debt Service... $19,523,210 $33,355,715 $21,536,270 Pro Forma debt service on Long-Term Indebtedness... 8,159,935 7,820,597 7,736,919 Historic Annual Pro Forma Debt Service Coverage Ratio x 4.27x 2.78x Continuing Disclosure... In order to comply with Securities and Exchange Commission Rule 15c2-12, the Corporation has agreed pursuant to a Continuing Disclosure Agreement dated as of March 1, 2007, with the Branch Banking and Trust Company, as dissemination agent, to provide certain financial information and operating data. See CONTINUING DISCLOSURE herein. Note on Forward Looking Statements... This Official Statement contains forward-looking information within the meaning of the federal securities laws. The forward-looking information includes statements concerning the Corporation s outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forwardlooking information and statements are subject to many risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. These risks and uncertainties include the availability and amount of Medicare and Medicaid reimbursements, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, and other risks and uncertainties described herein under RISK FACTORS. You are cautioned not to place undue reliance on forward-looking statements because actual results may differ materially from those expressed in, or implied by, the statements. Any forward-looking statement made in this Official Statement speaks only as of the date of such statement, and the Corporation undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. General... This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of the Official Statement will be deposited with the Municipal Securities Rulemaking Board, 1900 Duke Street, Alexandria, Virginia Copies of the Official Statement and the documents summarized and referred to in the Official Statement are available from the Underwriter for the cost of reproduction thereof. [Remainder of Page Intentionally Left Blank] (iv)

11 OFFICIAL STATEMENT $30,885,000 COUNTY OF WARREN, KENTUCKY HOSPITAL REFUNDING REVENUE BONDS, SERIES 2007A (BOWLING GREEN-WARREN COUNTY COMMUNITY HOSPITAL CORPORATION PROJECT) INTRODUCTORY STATEMENT This Official Statement, including the cover page and the appendices hereto, is provided to furnish certain information in connection with the offering by the Issuer of its Hospital Refunding Revenue Bonds, Series 2007A (Bowling Green-Warren County Community Hospital Corporation Project) in the aggregate principal amount of $30,885,000 to be issued by the Issuer pursuant to the Bond Indenture. Definitions of certain capitalized words used in this Official Statement are set forth in Appendix D hereto. The proceeds of the Bonds will be utilized pursuant to the terms and conditions of the Bond Indenture and the Loan Agreement. To secure the Bonds, in the Bond Indenture the Issuer will assign to the Bond Trustee certain of the Issuer s rights under the Loan Agreement and loan payments made by the Corporation under the Loan Agreement will be paid directly to the Bond Trustee. As security for the Bonds, the Corporation and such other organizations as from time to time are members the Obligated Group will issue The Series 4 Note payable to the Bond Trustee pursuant to the Master Trust Indenture and Supplemental Master Indenture No. 4. The Series 4 Note will be secured by a lien on the Revenues of the Corporation and any other members of the Obligated Group shared on a parity basis with the holders of other master indenture notes issued under the Master Trust Indenture, including the Series 1 Note issued to secure the Issuer s Hospital Revenue Bonds, Series 1998 (Bowling Green-Warren County Community Hospital Corporation) (the 1998 Bonds ), of which $48,145,000 in aggregate principal amount is currently outstanding. This Official Statement and the appendices hereto contain brief descriptions of, among other matters, the Issuer, the Bonds, the Corporation, the Hospital, the Loan Agreement, the Master Indenture, The Series 4 Note, and the Bond Indenture. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Loan Agreement, the Master Indenture, the Series 4 Note, and the Bond Indenture are qualified in their entirety by reference to such documents, and references herein to the Bonds are qualified in their entirety to the form thereof included in the Bond Indenture. Until issuance and delivery of the Bonds, copies of the documents described herein may be obtained from the Underwriter. After delivery of the Bonds, copies of such documents will be available for inspection at the designated corporate trust office of the Bond Trustee in Wilson, North Carolina. For further information concerning the security for the Bonds, see SECURITY AND SOURCES OF PAYMENT FOR THE BONDS herein and SUMMARIES OF CERTAIN LEGAL DOCUMENTS in Appendix D hereto. PLAN OF FINANCING The Bonds are being issued by the Issuer to (1) currently refund $28,875,000 of the Issuer s Variable Rate Demand Hospital Revenue Bonds, Series 2001 (Bowling Green-Warren County Community Hospital Corporation Project) (the Prior Bonds ) that were issued to (i) finance (a) construction of a new emergency services department at the Medical Center at Bowling Green, a general acute care hospital, licensed for 327 beds with 250 beds in use, located in Bowling Green, Kentucky (the

12 Hospital ), (b) construction of a new surgery service component within the Hospital, (c) construction and equipping a new diagnostic services area, and (d) certain site development, (ii) pay letter of credit fees relating to the Prior Bonds, and (iii) pay costs of issuing the Prior Bonds, (2) fund a debt service reserve fund for the Bonds, and (3) pay costs of issuing the Bonds. Any costs of issuance of the Bonds that are in excess of the amounts permitted to be paid from proceeds of the Bonds will be paid by the Corporation. THE ISSUER The County of Warren, Kentucky is a county and a public body corporate and politic, duly created and existing as a political subdivision of the Commonwealth of Kentucky under the Constitution and laws of Kentucky. The Issuer is governed by a Fiscal Court composed of an elected County Judge Executive and six Magistrates elected to represent the six magisterial districts of Warren County. The Issuer is authorized by the Act to issue the Bonds and to lend the proceeds to the Corporation. The issuance of the Bonds and the execution and delivery of the Loan Agreement and the Bond Indenture has been authorized by an Ordinance of the Issuer acting by and through its Fiscal Court. The Bonds are limited obligations of the Issuer as described in this Official Statement. The Issuer is not generally liable for the Bonds or any other obligations incurred by the Issuer under the Bond Indenture or the Loan Agreement. The Bonds are not general obligations and do not constitute debts or pledges against the credit of the Issuer or the credit or taxing power of the Commonwealth of Kentucky or any political subdivision thereof. The Bonds are limited obligations of the Issuer, which will, if and when issued, be payable solely through the revenues, properties, or other funds as described in this Official Statement, the Bond Indenture, and the Loan Agreement. No owner of any Bond shall have the right to demand payment of the principal of, premium, if any, or interest on such Bond out of any funds to be raised by taxation. The Issuer has not prepared any material for inclusion in this Official Statement except the matters under this heading and under the heading LITIGATION The Issuer. The distribution and use of this Official Statement have been duly approved and authorized by the Issuer. Such approval and authorization, do not, however, constitute a representation of the approval by the Issuer of the accuracy or sufficiency of any information contained herein except to the extent of the information contained under this heading and under the heading LITIGATION The Issuer. THE CORPORATION Bowling Green-Warren County Community Hospital Corporation (the Corporation ) is a Kentucky nonstock, nonprofit corporation exempt from federal income taxation by virtue of Sections 501(a) and 501(c)(3) of the Internal Revenue Code. The Corporation is owned and controlled by Commonwealth Health Corporation, Inc., a nonstock, nonprofit Kentucky corporation ( Commonwealth ), under a holding company arrangement, which was established in Commonwealth is the parent company of a diversified system of health care organizations headquartered in Bowling Green, Kentucky. The entities owned and controlled by Commonwealth other than the Corporation are referred to herein as the Affiliates. See BOWLING GREEN-WARREN COUNTY COMMUNITY HOSPITAL CORPORATION in Appendix A attached hereto for a detailed description of the Corporation and its operations. See Appendix B hereto for the audited combined financial statements of the Corporation as of and for the three years ended March 31, 2006, 2005, and 2004 and Appendix C for the unaudited combined balance 2

13 sheets and statements of operations and changes in net assets of the Corporation as of and for the nine months ended December 31, 2006 and THE HOSPITAL The Corporation owns and operates The Medical Center at Bowling Green, a general acute care hospital licensed for 327 beds, with 250 beds in use, located on a 17 acre campus in Bowling Green, Kentucky that includes a six-story approximately 298,000 square foot hospital building. The buildings on the campus contain a total of approximately 376,000 square feet of space. The Corporation also owns and operates The Medical Center at Scottsville, a 25-bed critical access hospital and 110 nursing care beds. These beds are located in a 76,000 square foot building opened in 1996 on approximately 13 acres of land in Allen County, near Scottsville, Kentucky. The two facilities are operated as a single hospital under one license. References herein to the Hospital refers to the combined facilities. Commonwealth is a holding company for a total of eleven for-profit and nonprofit corporations and partnerships engaged in various aspects of the healthcare industry. Commonwealth has established various divisions for its operations, including (1) the Hospital, (2) Commonwealth Health Free Clinic, Inc., (3) The Medical Center at Franklin, Inc., (4) Commonwealth Regional Specialty Hospital, Inc., and (5) various for-profit corporations and partnerships. See BOWLING GREEN-WARREN COUNTY COMMUNITY HOSPITAL CORPORATION, Appendix A hereto. General Terms THE BONDS The Bonds will be issued only in fully registered form in denominations of $5,000 and integral multiples thereof. The Bonds will bear interest at the respective rates per annum and will mature in the amounts and on the dates set forth on the cover page hereof. Each Bond will bear interest (based on a 360-day year of twelve 30-day months) from its date, payable on February 1 and August 1 of each year, commencing August 1, The Bonds will initially be dated their date of issuance. For a description of the method of payment of principal, premium, if any, and interest on the Bonds and matters pertaining to transfers and exchanges while registered in the name of Cede & Co., see BOOK-ENTRY ONLY SYSTEM below. Registration and Transfers In connection with any exchange or transfer of the Bonds, the holder requesting such exchange or transfer shall remit to the Bond Trustee an amount sufficient to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Neither the Issuer nor the Bond Trustee shall be required to make any exchange or transfer of a Bond after notice calling such Bond or portion thereof for redemption has been mailed or during the period of seven days next preceding the mailing of notice of redemption of Bonds of the same maturity. Redemption of the Bonds Prior to Maturity The Bonds shall be subject to redemption prior to maturity at such times, to the extent and in the manner summarized below. 3

14 Optional Redemption Bonds maturing on or prior to August 1, 2017, are not subject to optional redemption prior to their respective maturities, except as provided in Extraordinary Redemption below. The Bonds maturing on and after August 1, 2018, will be subject to optional redemption in whole or in part on any date commencing August 1, 2017, as directed by the Corporation, within a maturity by lot in such manner as the Bond Trustee may determine, at the Redemption Price equal to the principal amount of the Bonds being redeemed, plus interest accrued on the redemption date. Sinking Fund Account Redemption The Bonds maturing on August 1, 2021, are subject to mandatory sinking fund redemption from the Sinking Fund Account by the Issuer, acting through the Bond Trustee, prior to maturity by lot in such manner as the Bond Trustee may determine, at a Redemption Price of 100% of the principal amount thereof, plus interest accrued on the redemption date, on August 1 in the years and in the principal amounts set forth below: Principal Principal Year Amount Year Amount 2019 $1, * $1,275, ,210,000 * Maturity The Bonds maturing on August 1, 2026, are subject to mandatory sinking fund redemption from the Sinking Fund Account by the Issuer, acting through the Bond Trustee, prior to maturity by lot in such manner as the Bond Trustee may determine, at a Redemption Price of 100% of the principal amount thereof, plus interest accrued on the redemption date, on August 1 in the years and in the principal amounts set forth below: Principal Principal Year Amount Year Amount 2022 $1,340, $1,555, ,405, * 1,635, ,480,000 * Maturity The Bonds maturing on August 1, 2029, are subject to mandatory sinking fund redemption from the Sinking Fund Account by the Issuer, acting through the Bond Trustee, prior to maturity by lot in such manner as the Bond Trustee may determine, at a Redemption Price of 100% of the principal amount thereof, plus interest accrued on the redemption date, on August 1 in the years and in the principal amounts set forth below: 4

15 Principal Principal Year Amount Year Amount 2027 $1,720, * $1,900, ,805,000 * Maturity The Bonds maturing on August 1, 2031, are subject to mandatory sinking fund redemption from the Sinking Fund Account by the Issuer, acting through the Bond Trustee, prior to maturity by lot in such manner as the Bond Trustee may determine, at a Redemption Price of 100% of the principal amount thereof, plus interest accrued on the redemption date, on August 1 in the years and in the principal amounts set forth below: Principal Principal Year Amount Year Amount 2030 $1,990, * $2,085,000 * Maturity The principal amount of the Bonds required to be redeemed on any mandatory redemption date may, at the direction of the Corporation, be reduced by the principal amount of the Bonds (1) purchased by or surrendered to the Bond Trustee for cancellation or (2) redeemed other than through sinking fund redemption, and which, in either case, have not previously been the basis for a reduction of the principal amount of the Bonds to be redeemed through sinking fund redemption. Extraordinary Redemption The Bonds are subject to redemption prior to maturity as a whole at any time or in part from time to time from and to the extent of any insurance proceeds or condemnation awards applied to the prepayment of all or a portion of the Series 4 Note pursuant to the Master Indenture. Any such redemption shall be effected at a redemption price equal to the principal amount of the Bonds so redeemed, plus accrued interest to the redemption date. In the case of any redemption of less than all of the Bonds, the Bonds shall be selected for redemption by the Bond Trustee on a reasonably proportionate basis from among all the then existing maturities, such basis to be determined and effectuated as nearly as practicable by the Bond Trustee by multiplying the total amount of money available to redeem Bonds on the date fixed for redemption by the ratio which the principal amount of all Bonds outstanding in each maturity bears to the principal amount of all Bonds then outstanding; and Bonds within a maturity shall be selected for redemption by lot in such manner as the Bond Trustee may determine. Selection of Bonds to Be Redeemed If less than all of the Bonds of the same maturity are to be redeemed, the Bond Trustee shall select the Bonds to be redeemed by lot in such manner as the Bond Trustee may determine. In making such selection, the Bond Trustee shall treat each Bond as representing that number of Bonds of the lowest authorized denomination as is obtained by dividing the principal amount of such Bond by such denomination. 5

16 Partial Redemption of Bonds Upon the selection and call for redemption of, and the surrender of, any Bond for partial redemption, the Issuer shall cause to be executed and the Bond Trustee shall authenticate and deliver to or upon the written order of the holder, at the expense of the Corporation, a new Bond or Bonds of authorized denominations in an aggregate face amount equal to the unredeemed portion of the Bond surrendered. Effect of Call for Redemption On the date designated for redemption, the Bonds called for redemption shall become and be due and payable at the Redemption Price provided for such Bonds on such date. If on the date fixed for redemption moneys for payment of the Redemption Price and accrued interest are held by the Bond Trustee or paying agents, interest on such Bonds shall cease to accrue, such Bonds shall cease to be entitled to any benefit or security under the Indenture except the right to receive payment from the moneys held by the Bond Trustee or the paying agents and the amount of such Bonds called for redemption shall be deemed paid and no longer Outstanding. Notice of Redemption The Bond Trustee shall mail, via first class mail, notice of any redemption of Bonds not less than 30 nor more than 60 days prior to the date set for redemption. If less than all the Bonds are to be redeemed, the Bonds to be redeemed shall be identified by reference to the issue and series designation, date of issue, serial numbers, maturity dates and such other information as the Bond Trustee shall deem advisable or appropriate. The notice shall be mailed to each holder of a Bond to be redeemed at the address shown on the books of the Bond Trustee, but failure to receive such notice or any defect therein shall not affect the validity of the proceedings for, the redemption of any Bond. Upon the written direction of the Corporation, the notice of redemption for optional redemption or extraordinary redemption shall contain a statement to the effect that the redemption of the Bonds is conditioned upon the receipt by the Bond Trustee, prior to the date fixed for such redemption, of amounts equal to the redemption price of the Bonds to be redeemed, and that if such moneys shall not have been so received, the notice will be of no force and effect and the Issuer shall not be required to redeem such Bonds and such Bonds shall not become due and payable. BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 2.2 million 6

17 issues of U.S. and non-u.s. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. 7

18 Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payment proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the Issuer or Trustee on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Issuer or Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered to the registered owner The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to the registered owner. The Issuer, the Corporation and the Bond Trustee cannot and do not give any assurances that Direct Participants or Indirect Participants will distribute to the Beneficial Owners of the Bonds (i) payments of principal of, or interest and premium, if any, on the Bonds, (ii) confirmation of their ownership interests in the Bonds or (iii) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will do so on a timely basis or that DTC, Direct Participants or Indirect Participants will serve and act in the manner described in this Official Statement. NEITHER THE ISSUER, THE CORPORATION NOR THE BOND TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO THE DIRECT PARTICIPANTS, THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT, (2) THE PAYMENT BY ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (3) THE DELIVERY BY ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO BONDHOLDERS UNDER THE TERMS OF THE BOND INDENTURE; (4) THE SELECTION OF 8