Memorial Medical Center Requesting $1.5 Million Loan Backed by the City of Neillsville
Monday, May 19th, 2014 -- 8:53 AM
-Memorial Medical Center is requesting a $1.5 million loan through the city of Neillsville.I spoke with Ryan Neville, CEO of MMC, and Roger Sneath, CFO of MMC, and they explained the loan and situation in better detail.
This loan would be placed through the city using its general obligation borrowing authority and is proposed to qualify for tax exempt status with a loan term of 10 years. MMC would repay the loan by using semi-annual payments of $89,500 twice each year. MMC is also asking the loan be fully pre-payable without penalty.
MMC has appeared before Neillsville?s Economic Development Committee to request the loan and they would use this money to purchase capital equipment needed in order to maintain its state of the art technology. The hospital made its final payment on a $3 million bond issue that was issued by the city back in 2003. Mr. Sneath said that in pursuing this new loan, it?s logical for a business to have debt as it grows and renews itself.
The hospital is asking that this money come through the City of Neillsville because of a combination of factors including the much tougher borrowing environment and the chaotic and ever changing healthcare market. MMC feels that it cannot obtain any significant financing without the help of the city. The city is a neutral party, as Mr. Sneath put it.
However, MMC does not want the taxpayers of Neillsville to worry. When I asked Roger and Ryan how the taxpayers of Neillsville would be affected by this loan, their response was: ?hopefully, not at all.? MMC will be providing collateral for the loan. The hospital has $9.5 million in assets in the form of fully collectable accounts receivable, property, plant and equipment. Therefore, if MMC should find itself unable to pay, the collateral provided by the facility will pay for the loan.
Mr. Neville hopes that people will consider the impact Memorial Medical Center has on the area. It was found that small communities like Neillsville that have had a hospital, but lost them, suffered. Unemployment rose by 1.6% about 3 years after the close and per capita income dropped by $1,000.
The proposal will be up to the City Council, as to pursue it or not. Should they approve the idea, MMC will work with the city attorney to draw up the proper paper work and send it to the banks for bids.
Feel free to contact us with questions and/or comments.