Loan Agreement Signed
Contact: Tammy G. Love
Director of Marketing & Medical Staff Development
Phone: (336) 651-8116
By CHARLES S. WILLIAMS
Wilkes Journal-Patriot Staff
Wilkes Regional Medical Center officials have signed the formal agreement to borrow $25 million from Wake Forest Baptist Health for the expansion project starting today and for other projects.
Of that amount, $22 million will be paid back over a 23 year period with a fixed interest rate of 6.09 percent. Wilkes Regional is required to pay back only interest over the first 24 months of the loan. The other $3 million is part of a variable rate loan with a five-year term.
Over half of the money $14,865,000 will be used to help fund the expansion of the emergency department (ED) and operating room, as well as equipment for the expansion. Also, $1,105,075 will be used to reimburse hospital reserves for the costs associated with planning for the expansion. Closing costs for the loan are estimated at $75,000.
A portion of the loan proceeds, $7,063,749, will be used to refinance the balance of a $9 million loan for an earlier construction project (which included the WRMC Diagnostic Imaging Center at West Park), and help finance a new $4 million computer system that will "go live" in December.
Interest on the loan is payable each Oct. 1 and April 1, with the principal payable April 1.
The WRMC hospital operating board approved borrowing the money earlier this year. North Wilkesboro commissioners then gave the hospital clearance to proceed with the loan at the town board May 3 meeting. The town owns the hospital, which is leased to the hospital operating board and managed by Carolinas Healthcare System (CHS). The base lease payments are $600,000 annually, or .75 percent of total net revenues, whichever is greater.
Agreement approved in 2007
In 2007, the operating board signed a 30 year lease agreement with the town for the hospital. The 23 page lease in cluded provisions for a long term manage ment services contract with CHS to oversee day to day operations, finances and overall strategic direction for the hospital. In addition, Wake Forest Baptist Health agreed to guarantee up to $25 million of WRMC's debt if the hospital sold bonds to finance construction projects. Hospital officials decided to borrow the money rather than issuing bonds in order to avoid fees associated with the bond market.