The Evangelical Lutheran Good Samaritan Society

Transcription

1 The Evangelical Lutheran Good Samaritan Society - Disclosure of Intent of Piper Jaffray & Co. to Bid for the Society s Auction Rate Bonds and Then to Sell the Bonds to the Society - Date of Next Auction: December 10, 2008 Report of Material Development December 4, 2008 $2,275,000 Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2004C Maturity Date June 1, 2017 Cusip N55

2 Section 1. Introduction. This Report of Material Development is being filed with the Nationally Recognized Municipal Securities Information Repositories (the NRMSIRs ) listed on Appendix A to this Report, in connection with the Colorado Health Facilities Authority s Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2004C (the Bonds ), originally issued in the principal amount of $37,150,000, of which $2,275,000 is currently outstanding. Capitalized terms used but not defined in this Report shall have the meanings given those terms in the official statement dated August 23, 2004, relating to the Bonds (the Official Statement ). Under the terms of the Bond Indenture, the Auction Agent Agreement and the Broker- Dealer Agreement entered into with respect to the Bonds, the Bonds bear interest at an Auction Rate. The United States Securities and Exchange Commission (the SEC ) released a no-action letter dated March 14, 2008 (the Letter ) regarding certain aspects of the bidding on auction rate securities, which has been clarified in some respects in the Clarification Memo Regarding SEC No-Action Letter of March 14, 2008, published by SIFMA on April 8, The SEC may, in the future, release further guidance. If the SEC issues such further guidance, then The Evangelical Lutheran Good Samaritan Society (the Society ) will supplement this Notice of Material Development to the extent it determines it is necessary or advisable in light of such guidance. A copy of the SEC s Letter may be obtained at Section 2. Intention to Submit a Bid on the Bonds. The Society and Piper Jaffray & Co. ( Piper ) have reached an agreement whereby Piper intends to submit a bid to Citigroup Global Markets Inc. ( Citigroup ), as the Broker-Dealer with respect to the Bonds under the Broker-Dealer Agreement, in the next auction to purchase all of the outstanding Bonds not yet beneficially owned by the Society. The next auction will be conducted on Wednesday, December 10, 2008 (the December 10 Auction ). The Society has agreed with Piper that one Business Day after Piper purchases any of the Bonds, the Society will buy those Bonds from Piper at par plus accrued interest to the purchase date. It should be noted that the interests of Piper and the Society in entering into this agreement and in Piper s submitting a bid and then selling the Bonds to the Society are different from and, in fact, may be contrary to the interests of any other investor because Piper and the Society are seeking to establish a low interest rate on the Bonds while an investor generally seeks a high interest rate on the Bonds. The Society and Piper currently intend to take the following steps under their agreement: (a) Piper will submit a bid to Citigroup, as Broker-Dealer, on its behalf, in the December 10 Auction on December 10, 2008, to purchase all of the outstanding Bonds available in the December 10 Auction, at an interest rate equal to the most recently published SIFMA Municipal Swap Index (as published by the Securities and Financial Markets Association) plus 0.25% (the Designated Rate ), which, for the December 10 Auction, is equal to a rate of 1.10%. The SIFMA Municipal Swap Index may be obtained at archives1.sifma.org/swapdata.html. Piper will purchase all of the Bonds for which it is the successful bidder. One Business Day after Piper s purchase of those Bonds, the Society will buy all of those Bonds from Piper at par plus accrued interest to the purchase date. 2

3 (b) So long as the Society is not the beneficial owner of all of the outstanding Bonds, it is the present intention of Piper and the Society to continue this arrangement, with Piper submitting a bid to Citigroup for the Bonds in each auction at the Designated Rate (as it may change from time to time) until the Society is the beneficial owner of all of the outstanding Bonds. (c) The Society recently surrendered to the Trustee for cancellation all of the Bonds for which it was the beneficial owner, and directed the Authority to request that the Trustee send out a notice of redemption for all of the remaining outstanding Bonds on December 18, That notice has been sent. Until the redemption date, the Society and Piper intend to continue to their arrangement as set forth above, and from this date forward the Society intends to remain the beneficial owner of Bonds it acquires, until at least December 11, (d) The Society currently intends to enter Hold Orders for all of the Bonds beneficially owned by the Society until at least December 11, The Society has requested the Authority to issue refunding bonds, to settle on December 11, The Society currently intends to turn in for redemption any Bonds beneficially held by it on that date, and to use the remainder of the net proceeds to redeem the then outstanding Bonds on December 18, 2008, and to retire the debt it incurred to purchase the Bonds it surrendered for cancellation. The Society intends to file another Material Event Notice within the next week, describing the proposed refunding. The entering of Hold Orders could lead to the application of the All-Hold Rate, equal to 55% of the One-Month LIBOR Rate, which may be a below market rate. (e) Following any auction which results in Piper s bid becoming the Auction Rate and at any time until the next succeeding auction, any holder of any outstanding Bonds may sell all or any portion of such Bonds to Citigroup, without regard to whether such holder submitted a sell order with respect to such auction. Citigroup will purchase, on behalf of Piper, all such Bonds at a price equal to par plus accrued interest thereon. Piper will purchase such Bonds from Citigroup at a price of par plus accrued interest and, pursuant to the agreement between Piper and the Society, one Business Day after Piper buys those Bonds from Citigroup, the Society will buy the Bonds from Piper, at a price equal to par plus accrued interest to the purchase date. (f) Within two Business Days following the December 10 Auction, and at least two Business Days prior to and following each subsequent auction in which Piper bids pursuant to an agreement with the Society, the Society will provide notice to the NRMSIRs detailing information regarding bidding in such auction, including the amount of Bonds offered for sale in the auction; the number and aggregate dollar amount of bids made; the number of bidders other than Citigroup or Piper; the number, interest rate(s) and amounts of bids, if any, made by Citigroup or Piper; the clearing rate; and the high, low and median bids received. This information and historical information regarding prior auctions will also be made available on the Society s public website at and on Citigroup s public website at 3

4 Section 3. Resulting Interest Rate. If in any auction there are no bids to purchase Bonds at an interest rate that is lower than the Designated Rate, then (1) the Society intends ultimately to become the owner of any Bonds purchased by Piper in such auction and (2) the Auction Rate will be reset to a rate equal to the Designated Rate and all of the Bonds (whether or not owned ultimately by the Society and whether or not offered by their respective owners for sale in such auction) subject to such auction will bear interest at that rate. Section 4. Future Actions. The Society and Piper intend to continue to take the steps described above until further notice. The Society will provide notification to the NRMSIRs promptly upon any determination by the Society and Piper to discontinue or to change such actions. Section 5. Immediately Preceding Auction. The immediately preceding auction for the Bonds was held on December 3, Information concerning the auction, including the amount of Bonds for sale; the number and aggregate dollar amount of bids made; the number of bidders other than the Broker-Dealer, Piper and the Society; the number, interest rate(s) and amount(s) of bids, if any, made by the Broker-Dealer, Piper and the Society; the clearing rate; and the high low and median bids received is included in Appendix B attached to this Report. Section 6. Auction Period; No Further Auction. The current Auction Period is 7 days. The next auction for the Bonds after December 10, 2008, would be Wednesday, December 17, 2008, but no further auction will be held, because all of the Outstanding Bonds have been called for redemption on Thursday, December 18, All Outstanding Bonds will be paid and retired on Thursday, December 18,

5 APPENDIX A NRMSIRs The Report of Material Development will be disseminated to the following NRMSIRs: Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey Phone: (609) Fax: (609) Munis@Bloomberg.com DPC Data Inc. One Executive Drive Fort Lee, NJ Phone: (201) Fax: (201) nrmsir@dpcdata.com Interactive Data Pricing and Reference Data, Inc. Attn: NRMSIR 100 William Street, 15 th Floor New York, New York Phone: (212) ; (800) Fax: (212) NRMSIR@interactivedata.com Standard & Poor's Securities Evaluations, Inc. 55 Water Street, 45 th Floor New York, NY Phone: (212) Fax: (212) nrmsir_repository@sandp.com

6 APPENDIX B Information Concerning the Immediately Preceding Auction Issuer Name: Borrower Name: Colorado Health Facilities Authority Evangelical Lutheran Good Samaritan Society Principal Amount Issued: $37,150,000 Principal Amount Outstanding: $2,275,000 Securities: Frequency: 7 Day (W) CUSIP: N55 Auction Date: 12/03/ Amount of Securities for sale in the Auction: $2,275, Aggregate Dollar Amount of Bids: $60,950, High Bid: 8.000% 4. Low Bid: 1.280% 5. Median Bid: 4.640% 6. Clearing Rate: 1.280% 7. Total Number of Bids: 3 a. Number of Bids (other than dealer/issuer): 0 b. Bid(s) Made by Participating Dealer, if any: Number: 1 Interest Rate: 8.000% Amount: $30,475,000 c. Bid(s) Made by Participating Dealer on Behalf of Issuer/Borrower, if any: Number: 2 Interest Rate: 1.280% Amount: $1,875,000 Interest Rate: 0.000% Amount: $28,600,000