05-13-2020 Council Packet - Laserfiche WebLink

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31 successful and that the Limited Guarantor will have the resources to meet its obligations under the Limited Guaranty. In addition, the total payments payable by the Limited Guarantor under the Limited Guaranty are limited to $4,000,000 (exclusive of any costs of collection of such amounts). The Limited Guaranty will terminate as described above under the heading “SECURITY FOR THE SERIES 2020 BONDS — The Limited Guaranty of Guarantor” in this Official Statement. Future Guaranties and Indebtedness of the Limited Guarantor. The Limited Guarantor may act as borrower or guarantor with respect to future debt issuances or future communities of affiliates of the Limited Guarantor and its affiliates. No assurance can be given that Limited Guarantor will be able to generate sufficient revenues to fulfill outstanding guaranties in the future. In addition, the Limited Guaranty allows the Limited Guarantor to incur additional indebtedness and other guaranties. See “APPENDIX A - THE BORROWER, LANGSTON SHORES, AND THE LIMITED GUARANTOR” in this Official Statement. Additional Guaranteed Debt by Limited Guarantor; Dilution. The Limited Guaranty does not prohibit the incurrence of other indebtedness and guaranties of indebtedness by the Limited Guarantor. The incurrence of additional indebtedness and guaranties could materially and adversely affect the ability of the Limited Guarantor, as guarantor, to satisfy the obligations under the Limited Guaranty. If an Event of Default occurs, there can be no assurance that such Limited Guaranty would be sufficient to pay the principal of and interest on the Series 2020 Bonds. Government Regulation and Reimbursement – Generally. Communities such as the 2018 Project and many of the skilled nursing communities owned or operated by affiliates of the Sole Member are subject to extensive governmental regulation through state licensing requirements and complex laws and regulations imposed at the federal and state level for communities to remain licensed and certified to receive payments under the Medicare and Medicaid programs. The various state licensing agencies in which affiliates of the Limited Guarantor such as MDH renew licenses annually and makes periodic inspections to determine compliance with licensure and certification requirements. Continuing licensure to provide health care is essential to the operation of certain community affiliates with the Limited Guarantor. Further, revenues of the Borrower and the Limited Guarantor are somewhat dependent on payments under the Medicare and Medicaid programs, such that a loss of licensure for participation in the Medicare and Medicaid programs or an elimination of or a material reduction in the availability of Medicare and Medicaid payments might materially adversely affect the operations and financial condition of the Borrower and/or the Limited Guarantor. See “APPENDIX A - THE BORROWER, LANGSTON SHORES, AND THE LIMITED GUARANTOR” in this Official Statement. Medicare Program. The Borrower and certain of affiliates of the Limited Guarantor are licensed to receive payments under Medicare. For Fiscal Years ended September 30, 2019 and 2018, approximately 7.5% and 9.3%, respectively, of the revenues of the affiliates of the Limited Guarantor were derived from Medicare payments. The Borrower and the Limited Guarantor and certain of their affiliates are subject to highly technical regulations by a number of federal, state and local government agencies and private agencies, including those that administer the Medicare program. Changes in the structure of the Medicare system, as well as potential limitations on payments from governmental and other third party payors, could potentially have an adverse effect on the results of operations of the Borrower and the Limited Guarantor. Actions by governmental agencies concerning the licensure and certification of certain communities owned or operated by the Borrower, the Limited Guarantor, or their affiliates or the initiation of audits and investigations concerning billing practices could also potentially have an adverse effect on the results of operations of the Borrower and the Limited Guarantor and certain of their affiliates.