DALLAS - The bankruptcy of El Paso Children's Hospital should have no effect on owners of the hospital's $120 million of general obligation bonds, according to a voluntary disclosure filed on the Municipal Securities Rulemaking Board's EMMA website.
The May 19 filing "should not materially adversely affect the District's ability to make timely payment of principal and interest on the Bonds or any of its other outstanding bonded indebtedness," according
The general obligation bonds issued in 2008 are backed by a general obligation tax pledge of the El Paso County Hospital District, which is rated A-Plus by Standard & Poor's. The ratings agency placed the district on its watch list for a possible downgrade, but the rating already had a negative outlook on the district's $251 million of debt.
EPCH has not paid any of its contractual obligations to the hospital district for about 15 months, and the amounts owed under the terms of the various support and administrative agreements and the facility lease exceed $90 million, according to the notice. In its filing, EPCH disputes the amounts owed to the district under the various agreements, including the lease covering the EPCH facilities
"At this time, district management cannot predict the outcome of EPCH's bankruptcy or the effect of such bankruptcy on amounts owed to the district," the notice declared. "however, the district had previously determined that EPCH lacked sufficient funds to make payments to the district for the foreseeable future and had fully reserved for all amounts owed to it by EPCH prior to EPCH's bankruptcy filing.
"The District has continued to fully reserve for the additional amounts owed since that date," the notice said.
District management is preparing an operating budget for the District's 2016 fiscal year. The budget will contain revenue assumptions and a proposed tax rate for operations and debt service, the notice said.
The El Paso County Commissioners Court is required to approve the district's 2016 fiscal year budget and adopt the applicable tax rate for the District by Sept. 30, 2015.
