[1994-02-03] Minutes of a meeting of the Executive Committee of the Board of Visitors of Virginia Commonwealth University February 3, 1994.

              MINUTES OF A MEETING OF THE EXECUTIVE COMMITTEE 
         OF THE BOARD OF VISITORS OF
        VIRGINIA COMMONWEALTH UNIVERSITY
             February 3, 1994


   A meeting of the Executive Committee of the Board of Visitors 

of Virginia Commonwealth University was held on Thursday, Febru- 

ary 3, 1994, at 10 a.m., in the University Meeting Center.

   Present were Dr. Holland (Vice Rector); Mr. Townes; and 

Mrs. Epps. Messrs. Siegel and Whitworth were absent. Also 

present were Dr. Trani; Messrs. Bruegman, Fischer, Jez, 

Mottesheard, Puleo and Ross; and Mesdames Price and Balmer. 

Wheat, First Securities was represented by Messrs. Craigie and 

Johnson; Mr. Dunning represented Craigie Incorporated; Crestar 

representative was Mr. Byrd; and Mr. Pope represented Hunton and 

Williams.

   Dr. Holland called the meeting to order. The Board of 

Visitors at its January meeting authorized the Executive Committee to

adopt appropriate series resolutions to execute the refunding of the 

Hospitals bonds.

   Mr. Johnson from Wheat, First Securities gave a brief over- 

view of the pricing from the underwriters and discussed handout 

Number One. The Series and Amending Resolution authorizes and 

secures $48,840,000 of Medical College of Virginia Hospital Revenue 

Refunding Bonds. These bonds were issued to refund all of the 

outstanding MCVH Series A and all of the callable outstanding Series 

C Bonds. The refunding will allow MCVH to achieve gross savings 

over the life of the refunded debt of over $19.8 million. The net 

present value savings of the refunding exceeds $4.9 million and
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represents 8.97 percent of the refunded bonds. In addition, the 


Hospital will be debt-free in the year 2003. MCVH received an up- 


grade in the debt rating to AA- from A+ from one of the two rating 


agencies, Standard and Poors. The other rating agency, Moody's 


Investors Service, continues to rate our MCVH debt at Al.


      Mr. Byrd representing Crestar Securities Corporation pre- 


sented the report of the Financial Advisor. It was stated that the 


Series D Resolution, the Preliminary Official Statement and refunding 


analyses prepared by MCVH's managing underwriters had been re- 


viewed. Crestar also participated in pricing negotiations between 


University officials and MCVH management and the managing under- 


writers of the issue. The following presents a summary of the sig- 


nificant issues relating to the structure and sale of the Series D 


Bonds:


      The Series D Bonds will refund all of the outstanding Series 
      A Bonds and all of the callable outstanding Series C Bonds.


      The Series D Bonds are structured with serial maturities from 



      1994 to 2003. MCVH has chosen to take the savings resulting from the refunding in later years thus shortening the
      final maturity of the refunding issue, resulting in lower 
      issuance and interest costs associated with the Series D 
      Bonds.


      The Series D Bonds will not be secured by a debt service 
      reserve fund. Furthermore, the existing debt service re- 
      serve fund, to the extent it is over funded vis-a-vis maxi- 
      mum annual debt service on the non-callable Series C Bonds 
      that will remain outstanding after the refunding, will be 
      used to downsize the refunding issue. Absence of a debt 
      service reserve fund will also reduce issuance costs. The 
      absence of a debt service reserve fund may eliminate some 
      potential institutional investors.


      The Series D bonds will not be secured by a depreciation 
      reserve fund. The existing depreciation reserve fund will be 
      maintained, although not pledged to the Series C or Series D 
      bonds, and will be funded at levels to be determined solely 
      by MCVH.
      The Series D Bonds will be non-callable. MCVH would not 
      obtain a significant benefit in doing so and, in fact, such a 
      call could hinder the possible advance refunding of the 
      Series D Bonds in future years.

      MCVH has elected not to rate the refunded Series C Bonds. 
      Rating of the refunded bonds will not significantly benefit 
      MCVH and thus does not warrant the associated expense.

      The underwriting discount is the result of extensive negotia- 
      tions that included University officials, MCVH management, 
      the financial advisors, and the managing underwriters. 
      Originally a discount of $7.00 was proposed. However, an 
      agreement on the lower level ($6.41) was reached based on 
      the shortening of the final maturity of the issue and a 
      takedown in years 2002-2003 of $5.00.

      The Series D Bonds will be issued under a Series and Amending Resolution which authorizes issuance of the Series D
      Bonds and amends the Master Resolution under which the 
      Series C and Series D Bonds are issued. The amendments 
      to the Master Resolution provide MCVH with greater flexibili- 
      ty in the future issuance of debt and greater flexibility 
      regarding transfer of cash and marketable securities.

      Mr. Pope of Hunton and Williams presented the Series and 

Amending Resolution, a copy of the Series and Amending Resolution 

was attached to the Executive Summary presented by Wheat, First 

Securities, Inc., to provide further clarification of TAB A, the 

columns headed "Yield" and "Price." On motion made and seconded, 

the attached Series and Amending Resolution was approved.

      The meeting was adjourned at 10:45 a.m.