Municipal Secondary Market Disclosure Information Cover Sheet This cover sheet should be sent with all submissions made to the Municipal Securities Rulemaking Board, Nationally Recognized Municipal Securities Information Repositories, and any applicable State Information Depository, whether the filing is voluntary or made pursuant to Securities and Exchange rule 15c2-12 or any analogous state statute. See www.sec.gov/info/municipal/nrmsir.htm for the list of current NRMSIRs and SIDs. If this filing relates to a Single Bond Issue: Provide name of bond issue exactly as it appears on the cover of the Official Statement (please include name of state where the Issuer is located). Provide 9-digit CUSIP* numbers to which the information relates: If this filing relates to all securities issued by the Issuer or all securities of a specific credit or issued under a single indenture: Issuer s Name (please include name of state where issuer is located): Abilene Health Facilities Development Corporation Other Obligated Person s Name (if any): Sears Methodist Retirement System Obligated Group (exactly as it appears on the Official Statement Cover) Provide six-digit CUSIP* number(s) of Issuer: See attached *(Contact CUSIP s Municipal Disclosure Assistance Line at 212.438.6518 for assistance with obtaining the proper CUSIP numbers). Type of Filing: (X) Electronic (number of pages attached) ( ) Paper (number of pages attached) 6 If information is also available on the Internet, give URL:
What type of information are you providing? (Check all that apply) A. ( ) Annual Financial Information and Operating Data pursuant to Rule 15c2-12 (Financial information and operating data should not be filed with the MSRB) Fiscal Year Covered: B. ( ) Audited Financial Statements of CAFR pursuant to Rule 15c2-12 Fiscal Year Covered: C. (X) Notice of Material Event pursuant to Rule 15c2-12 (Check as appropriate) 1. (X) Principal and interest payment delinquencies 2. ( ) Non-payment related defaults 3. (X) Unscheduled draws on debt service reserves reflecting financial difficulties 4. ( ) Unscheduled draws on credit enhancements reflecting financial difficulties 5. ( ) Substitution of credit or liquidity providers, or their failure to perform 6. ( ) Adverse tax opinions or events affecting the tax-exempt status of the security 7. ( ) Modifications to the rights of security holders 8. ( ) Bond calls 9. ( ) Defeasances 10. ( ) Release, substitution, or sale of property securing repayment of the securities 11. ( ) Rating changes D. ( ) Notice of Failure to Provide Annual Financial Information as Required E. ( ) Other Secondary Market Information (specify): I hereby represent that I am authorized by the issuer of obligor or its agent to distribute this information publicly: Issuer Contact: Name Title Employer City State Zip Code Telephone Fax Email Address Issuer Web Site Dissemination Agent Contact, if any: Name Title Employer City State Zip Code Telephone Fax Email Address Relationship to Issuer Obligor Contact, if any: Name D. Keith Perry Title President and CEO Employer Sears Methodist Retirement System, Inc. City Austin, TX State TX Zip Code 78746 Telephone 512.329.6716 Fax 512.329.0933 Email Address kperry@sears-methodist.com Obligor Web Site www.sears-methodist.com
Investor Relations Contact, if any: Name Title Telephone Email Address
9-Digit CUSIP numbers to which the information relates: Series 1998A 003453AJ6 003453AK3 003453AL1 003453AM9 003453AN7 003453AP2 Series 1998B 003453 AA5 003453 AU1 Series 1999 003453AW7 003453AX5 003453AY3 Series 2003A 003453BB2 003453BC0 003453BD8 003453BE6 003453BF3 003453BG1 003453BH9 003453BJ5 003453BK2 003453BL0 003453BM8 Series 2003B 003453 BP1 003453 BN6
Notice of Material Event pursuant to Rule 15c2-12 Principal and Interest Payment Delinquencies Due to current operating results, sources of working capital currently available to the Obligated Group and the current working capital needs of the Obligated Group discussed in further detail below, the Obligated Group did not make the scheduled principal and interest payments on the bonds to which this notice relates (the Bonds ) due May 1, 2012. Unscheduled Draw on Debt Service Reserve Fund The following principal and interest payments (the Payments ) are due on the Bonds on May 15, 2012: Principal Due 5/1/2012 Interest Due 5/1/2012 Total Payment Due 5/1/2012 Series 1998A $785,000.00 $942,507.50 $1,727,507.50 Series 1999 $135,000.00 $241,887.50 $376,887.50 Series 2003A $120,000.00 $1,404,113.75 $1,524,113.75 Total $1,040,000.00 $2,588,508.75 $3,628,508.75 As of April 30, 2012, the balances of the bond funds for the Bonds are as follows: Balance Series 1998 Bond Fund $2,115,347.28 Series 1999 Bond Fund $25,700.63 Series 2003 Bond Fund $114,462.12 Total $2,255,510.03 It is anticipated that a draw on the debt service reserve funds will be made in order to pay the Payments due on the Bonds on May 15, 2012 in excess of the funds available in the bond funds. The draw on the debt service reserve funds is anticipated to be approximately $1,373,000. Retention of Management Consultant The Obligated Group has retained CliftonLarsonAllen to provide a management consultant s report with respect to management s budget for the Obligated Group for the remainder of 2012. It is anticipated that the management consultant s report will be available the week of July 20, 2012. Liquidity Issues Management believes the current operating cash shortfall is due to five primary reasons: 1. Decline in community services and therapy operations due to reduced Medicare reimbursement rates and underlying census; 2. Decline in revenue from skilled nursing units in both the continuing care retirement communities and the stand-alone nursing centers resulting from lower Medicaid reimbursement rates and census;
3. Reduced net turnover entry fees received in 2011 due to timing of entrance fee refunds; 4. Capital expenditure funding required for the Obligated Group campuses for immediate and necessary repairs; and 5. Required capital funding for the completion of the Meadowlake in the first quarter of 2011. In addition, the Obligated Group was required to repay approximately $465,000 in March 2012 on the Obligated Group s outstanding line of credit with Capital One, N.A. due to a reduction in the limit on the line of credit pursuant to the terms of the line of credit. Capital One, N.A. has also notified the Obligated Group that the interest rate on the borrowings under the line of credit and the interest rate on the term loan will increase by 2.5% in June 2012 and by an additional 2.5% in July 2012, for a total interest rate increase of 5%. Management estimates that the increased interest rate will result in additional interest charges of approximately $1 million annually, based on the existing loan balances. Proposed Restructuring Plan The Obliged Group anticipates that its representative will, on or before July 31, 2012, propose a plan to the holders of the obligations to restructure the Obligated Group debt. Audited Financial Statements It is anticipated that the audited financial statements for the Obligated Group for the fiscal year ended December 31, 2011 will be available on or about May 30, 2012. FORWARD-LOOKING STATEMENTS. This notice contains forward-looking information within the meaning of the federal securities laws. The forward-looking statements include statements about the Obligated Group s outlook for the future, as well as other statements of beliefs, future plans or strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking statements and information are subject to many risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. The reader is 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. The forward looking statements contained in this notice are applicable only as of the date of this notice, and the Obligated Group undertakes no obligation to update any forwardlooking statements, whether as a result of new information, future events or otherwise.