05-13-2020 Council Packet - Laserfiche WebLink

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A-12 Limited Guaranty, the Limited Guarantor agrees to provide a guaranty for the payment of debt service on the Series 2020 Bonds, subject to a limit of $4,000,000 (plus any costs of collection). The Limited Guaranty is subject to termination based upon the Borrower’s reaching certain financial conditions. The Limited Guarantor is in a covenant relationship with the Synod of Lakes and Prairies of the Presbyterian Church (USA). The Synod has no rights to appoint directors or officers of the Limited Guarantor or to direct its affairs, except that Synod approval is required for certain fundamental changes to the articles and bylaws of the Limited Guarantor which may alter its charitable mission. Additionally, the chief executive of the Synod is a non-voting ex officio member of the Limited Guarantor’s board of directors. PHS and its affiliates provide a broad range of high-quality housing choices, care and services for older adults throughout Minnesota, Wisconsin, Iowa, and Washington including senior housing nursing home care, memory care, primary care, home care, hospice, and home-delivered meals. In 2019, PHS and its affiliates served approximately 27,700 older adults and owned or managed approximately 7,800 apartments of senior housing and assisted living and approximately 1,700 nursing home beds. PHS and its affiliates employ over 6,700 employees in their mission to serve older adults. The Limited Guarantor is structured similar to a holding company for skilled nursing, assisted living and independent living facilities, home care, primary medical care, hospice care, and projects under development. In general, the facilities operated or affiliated with the Limited Guarantor are separately incorporated as non-stock organizations and each has its own board of directors that is elected directly or indirectly by the board of directors of the Limited Guarantor. The Limited Guarantor is the parent of multiple subordinate affiliates, each of which has a separate governing body, facilities, revenues, expenses and financing arrangements. In general, the majority of the members of each affiliate’s governing body are appointed by the governing body of the Limited Guarantor. The Limited Guarantor does not itself own properties and its activities account for a relatively minor portion of the revenues reported in the consolidated financial statements of the Limited Guarantor and its affiliates. Pursuant to the Limited Guaranty, only the Limited Guarantor, and not its affiliates, is obligated to make payments in accordance with the terms of the Limited Guaranty. Therefore, the consolidated financial statements of the Limited Guarantor and its affiliates may not provide a clear basis on which to evaluate the ability of the Limited Guarantor to perform under the Limited Guaranty. The consolidated financial statements for the year-end September 30, 2019 and 2018 of the Limited Guarantor and affiliates are included in “APPENDIX B – FINANCIAL FEASIBILITY STUDY.” Appendix B should be reviewed for informational purposes only, as an overview of the scope of the activities of the Limited Guarantor and affiliated organizations, not as a direct measure of the Limited Guarantor’s ability to perform under the Limited Guaranty. See “Creditworthiness of PHS” under the heading “Certain Bondholders’ Risks” in the front part of this Official Statement. Occupancy percentages for PHS for the four months ended January 31, 2020 by housing type are as follows: Long Term Care 92.3% Transitional Care 84.0% Assisted and Independent Living 96.3% Total PHS 95.2% Organizational Chart The following chart illustrates the relevant corporate structure of PHS and the relationships between the Borrower, PHS and other various related entities.