appendix a the aspirus system

520 Pages·2015·2.12 MB·English

NEW ISSUE Ratings: S&P: A+
Book-Entry Only Moody’s: A1
see “RAtINgS” heRein.
In the opinion of Quarles & Brady LLP, Bond Counsel, assuming continuous compliance with the terms of the Bond Indenture described below,
under present law, interest on the Series 2015A Bonds is excludable from the gross income of the owners of the Series 2015A Bonds for federal income
tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The
interest on the Series 2015A Bonds is, however, included in adjusted current earnings for the purposes of computing the alternative minimum tax
imposed on corporations. See the information under the heading “Tax Exemption” in this Official Statement for a more detailed discussion of some of
the federal income tax consequences of owning the Series 2015A Bonds. The interest on the Series 2015A Bonds is not exempt from present Wisconsin
income taxes.
$42,975,000
Wisconsin Health and Educational Facilities Authority
Revenue Bonds, Series 2015A
(Aspirus, Inc. Obligated group)
DAtED ............................................................ Date of issuance.
ISSUANCE, BOOK-ENtRY ONLY ................. The Wisconsin Health and Educational Facilities Authority (the “Authority”) will issue the above captioned bonds
(the “Series 2015A Bonds”) through the book-entry system of The Depository Trust Company, New York, New York
(“DTC”) pursuant to the Bond Trust Indenture described herein. No physical delivery of the Series 2015A Bonds
will be made to beneficial owners of the Series 2015A Bonds, except as described herein. Payments with respect to
the Series 2015A Bonds shall be made by the Bond Trustee to Cede & Co., as nominee of DTC which will, in turn,
remit such payments to DTC Participants for disbursement to the beneficial owners of the Series 2015A Bonds. See
“BOOK-ENTRY ONLY SYSTEM” herein.
SERIES 2015A BONDS MAtURItIES; Maturity Principal Interest
INtERESt RAtES; PRICES OR YIELDS; (August 15) Amount Rate Price Yield CUSIP*
AND CUSIPS .................................................. 2015 $ 120,000 2.000% 100.379 0.600% 97712DLL8
2016 420,000 3.000% 102.894 0.710% 97712DLM6
2017 430,000 4.000% 106.581 1.060% 97712DLN4
2018 445,000 4.000% 108.285 1.400% 97712DLP9
2019 460,000 5.000% 113.673 1.670% 97712DLQ7
2020 485,000 5.000% 115.479 1.900% 97712DLR5
2021 710,000 5.000% 116.636 2.150% 97712DLS3
2022 740,000 5.000% 117.251 2.400% 97712DLT1
2023 765,000 5.000% 117.756 2.600% 97712DLU8
2024 800,000 5.000% 118.031 2.780% 97712DLV6
2025 830,000 5.000% 117.661C 2.910% 97712DLW4
2026 965,000 3.000% 98.864 3.120% 97712DLX2
2027 990,000 3.125% 97.550 3.370% 97712DLY0
2028 1,010,000 3.250% 96.946 3.540% 97712DLZ7
2029 1,045,000 3.375% 96.958 3.650% 97712DMA1
2030 1,070,000 3.500% 97.109 3.750% 97712DMB9
2031 2,455,000 5.000% 112.055C 3.530% 97712DMC7
2032 2,000,000 5.000% 111.529C 3.590% 97712DMD5
2034 1,000,000 5.000% 110.833C 3.670% 97712DMH6
$7,220,000 4.000% Term Bond due August 15, 2035, priced at 98.750% to yield 4.091% CUSIP* 97712DME3
$8,920,000 4.000 % Term Bond due August 15, 2040, priced at 97.507% to yield 4.160% CUSIP* 97712DMF0
$10,095,000 4.000 % Term Bond due August 15, 2045, priced at 96.919% to yield 4.180% CUSIP* 97712DMG8
___________________
C Priced to earliest optional redemption date of February 15, 2025.
INtERESt PAYMENt DAtES ...................... August 15, 2015 and semiannually thereafter on every February 15 and August 15.
DENOMINAtIONS ......................................... The Series 2015A Bonds will be issued in authorized denominations of $5,000 or any multiples thereof.
REDEMPtION ................................................ The Series 2015A Bonds are subject to redemption and purchase prior to maturity as herein described. See the
information under the heading “THE SERIES 2015A BONDS – Redemption and Purchase Prior to Maturity” in this
Official Statement.
USES ............................................................... The Authority will lend the proceeds from the sale of the Series 2015A Bonds to Aspirus Keweenaw, a Michigan
nonprofit corporation (“Aspirus Keweenaw”), and Aspirus Riverview Hospital & Clinics, Inc., a Wisconsin nonstock,
nonprofit corporation (“Aspirus Riverview”) in order to (i) advance refund Series 2008 Bonds previously issued for
the benefit of Aspirus Riverview and (ii) finance and refinance the acquisition, construction renovation and equipping
of certain projects at Aspirus Keweenaw, as described in this Official Statement. See the information under the
heading “PLAN OF FINANCING” in this Official Statement.
LIMItED OBLIgAtION ................................ THE SERIES 2015A BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND ARE NOT A DEBT OR
LIABILITY OF THE STATE OF WISCONSIN OR OF ANY POLITICAL SUBDIVISION OR AGENCY THEREOF
OTHER THAN THE AUTHORITY. THE ISSUANCE OF THE SERIES 2015A BONDS SHALL NOT, DIRECTLY OR
INDIRECTLY, OR CONTINGENTLY OBLIGATE THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION
THEREOF TO LEVY ANY FORM OF TAXATION OR TO MAKE ANY APPROPRIATION FOR THE PAYMENT OF THE
PRINCIPAL OF OR INTEREST ON THE SERIES 2015A BONDS. THE SOURCE OF PAYMENT AND SECURITY FOR
THE SERIES 2015A BONDS IS MORE FULLY DESCRIBED HEREIN. THE AUTHORITY HAS NO TAXING POWER.
The Series 2015A Bonds are offered when, as and if issued and received by the Underwriter, subject to prior sale, to withdrawal or modification of the offer
without any notice, and to the approval of legality of the Series 2015A Bonds by Quarles & Brady LLP, Bond Counsel. Certain legal matters will be passed upon for
the Authority by Quarles & Brady LLP, as its general counsel. Certain legal matters will be passed upon for the Obligated Group by Polsinelli PC and for the Obligated
Group by Cari Logemann, Senior Vice President and General Counsel of Aspirus, Inc., and for the Underwriter by Nixon Peabody LLP.
Barclays
Official Statement dated April 23, 2015
* Copyright 2015, American Bankers Association. CUSIP data herein is provided by Standard & Poor's CUSIP Service Bureau, a division of The McGraw-
Hill Companies, Inc. The CUSIP numbers are provided for convenience and reference only.
REGARDING USE OF THIS OFFICIAL STATEMENT
The information contained herein under the heading “THE AUTHORITY” and “LITIGATION – The
Authority” has been furnished by the Wisconsin Health and Educational Facilities Authority (the “Authority”). The
information under the heading “BOOK-ENTRY ONLY SYSTEM” has been obtained from The Depository Trust
Company (“DTC”). The information under the heading “UNDERWRITING” has been obtained from Barclays
Capital Inc. (the “Underwriter”). All other information contained herein has been obtained from Aspirus, Inc. (the
“Parent Corporation”) and its affiliates (collectively, the “System”) and other sources (other than the Authority)
which are believed to be reliable. Such other information is not guaranteed as to accuracy or completeness by, and
is not to be construed as a promise or representation by, the Authority. The information and expressions of opinion
herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made
hereunder shall under any circumstances create any implication that there has been no change in the affairs of the
Authority or any member of the System since the date hereof.
No dealer, broker, salesperson or other person has been authorized by the Authority or any member of the
System to give any information or to make any representations other than those contained in this Official Statement
and, if given or made, such information or representations must not be relied upon as having been authorized by any
of the foregoing. This Official Statement shall not constitute an offer to sell or the solicitation of an offer to buy, nor
shall there be a sale of the Series 2015A Bonds by any person, in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction,
but the Underwriter does not guarantee the accuracy of or the completeness of such information.
This Official Statement contains a general description of the Series 2015A Bonds, the Authority, the
System and the plan of finance and sets forth summaries of certain provisions of the Act, the Bond Indenture, the
Loan Agreement and the Master Indenture described herein. The descriptions and summaries herein do not purport
to be complete and are not to be construed to be a representation of the Authority. Persons interested in purchasing
the Series 2015A Bonds should carefully review this Official Statement (including the Appendices attached hereto)
as well as copies of such documents in their entireties, which are held by the Bond Trustee at its principal corporate
trust office.
The order and placement of materials in this Official Statement, including the Appendices, are not to be
deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the
Appendices, must be considered in its entirety.
MEDICAL AND ASSOCIATE STAFF OF MEMBERS OF THE SYSTEM, MEMBERS OF THE
BOARDS OF DIRECTORS (AS DEFINED IN APPENDIX A) AS WELL AS SENIOR LEADERSHIP OF
MEMBERS OF THE SYSTEM SHOULD NOT DIRECTLY PURCHASE THE SERIES 2015A BONDS AS SET
FORTH IN GUIDELINES DISTRIBUTED BY MANAGEMENT OF THE SYSTEM.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2015A
BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NEITHER THE SERIES 2015A BONDS NOR OBLIGATION NO. 11 HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAVE THE BOND INDENTURE OR THE
MASTER INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS
AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. IN CERTAIN STATES,
THE FILING OF A NOTICE WITH THE STATE SECURITIES COMMISSION IS REQUIRED FOR THE
PUBLIC SALE OF THE SERIES 2015A BONDS IN ANY STATE. THE FACT THAT A NOTICE MAY HAVE
BEEN FILED IN CERTAIN STATES OR THAT A REGISTRATION OR QUALIFICATION MAY HAVE BEEN
OBTAINED IN SUCH STATES CANNOT BE REGARDED AS A RECOMMENDATION TO PURCHASE
SUCH SECURITIES. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON
THE MERITS OF THE SERIES 2015A BONDS OR THE ACCURACY OR COMPLETENESS OF THIS
OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL
OFFENSE.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING
STATEMENTS IN THIS OFFICIAL STATEMENT
Certain statements included or incorporated by reference in this Official Statement constitute “forward-
looking statements.” Such statements are generally identifiable by the terminology used such as “anticipate,”
“plan,” “expect,” “estimate,” “budget” or similar words. Such forward-looking statements include, among others,
under the captions “INTRODUCTION – The Obligated Group and the Master Indenture,” “SECURITY AND
SOURCE OF PAYMENT FOR THE SERIES 2015A BONDS” and “BONDHOLDERS' RISKS” in the forepart of
this Official Statement and “INTRODUCTION,” “THE ASPIRUS OBLIGATED GROUP,” “BUSINESS
STRATEGY,” “SERVICE AREAS OF THE ASPIRUS OBLIGATED GROUP MEMBERS AND COMPETITION
– Competition” and “SELECTED STATISTICAL AND FINANCIAL INFORMATION – Management's
Discussion and Analysis of Recent Financial Performance” in Appendix A to this Official Statement.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. THE OBLIGATED GROUP DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS
TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN CHANGES TO ITS EXPECTATIONS, OR
EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED, OCCUR.
Information provided by the members of the System for interim reporting periods should not be taken as
being indicative of full year results for many of the reasons set forth above.
TABLE OF CONTENTS

Page
INTRODUCTION ....................................................................................................................................... 1
Purpose of this Official Statement .................................................................................................. 1
The Obligated Group and the Master Indenture ............................................................................. 1
Purpose of the Series 2015A Bonds ................................................................................................ 3
Principal Documents ....................................................................................................................... 3
Concurrent Issuance of the 2015 Tax-Exempt Loan ...................................................................... 3
Security ........................................................................................................................................... 4
Outstanding and Additional Indebtedness ...................................................................................... 5
Interest Rate Exchange Agreements ............................................................................................... 6
Continuing Disclosure .................................................................................................................... 6
Bondholders’ Risks ......................................................................................................................... 7
General ............................................................................................................................................ 7
THE SERIES 2015A BONDS ..................................................................................................................... 7
Description of the Series 2015A Bonds .......................................................................................... 7
Denominations and Places of Payment ........................................................................................... 7
Registration, Transfers and Exchanges ........................................................................................... 8
Redemption and Purchase Prior to Maturity ................................................................................... 8
SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2015A BONDS ................................. 12
General .......................................................................................................................................... 12
The Loan Agreement .................................................................................................................... 12
The Master Indenture and Obligation No. 11 ............................................................................... 12
Additional Covenants Not Enforceable by Bond Trustee ............................................................. 14
BOOK-ENTRY ONLY SYSTEM ............................................................................................................. 14
Bonds In Book-Entry Form .......................................................................................................... 15
DTC And Its Participants .............................................................................................................. 15
Discontinuance of DTC Services .................................................................................................. 16
Use of Certain Terms in Other Sections of the Official Statement ............................................... 17
Disclaimer ..................................................................................................................................... 17
THE AUTHORITY ................................................................................................................................... 17
Powers ........................................................................................................................................... 17
Members of the Authority ............................................................................................................. 17
Authority Counsel ......................................................................................................................... 18
Financing Program of the Authority ............................................................................................. 18
Bonds of the Authority.................................................................................................................. 20
Interest on the Series 2015A Bonds Not Exempt from Wisconsin Income Taxes ....................... 20
State of Wisconsin Not Liable on the Series 2015A Bonds.......................................................... 20
PLAN OF FINANCING ............................................................................................................................ 20
The Series 2015A Project ............................................................................................................. 20
Refunding of the Series 2008 Bonds ............................................................................................ 21
Concurrent Issuance of the 2015 Tax-Exempt Loan .................................................................... 21
ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 22
ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS .............................................................. 23
BONDHOLDERS’ RISKS ........................................................................................................................ 24
General .......................................................................................................................................... 24
Significant Risk Areas Summarized ............................................................................................. 24
Impact of Disruptions in the Credit Markets and General Economic Factors .............................. 27
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TABLE OF CONTENTS
(continued)
Page

Financial Industry Risk ................................................................................................................. 27
Proposed Changes to Tax Treatment of Series 2015A Bonds ...................................................... 28
Nonprofit Health Care Environment ............................................................................................. 28
Patient Service Revenues .............................................................................................................. 33
Interest Rate Swap and Other Hedge Risk .................................................................................... 46
Additional Debt ............................................................................................................................. 46
Regulatory Matters........................................................................................................................ 46
Business Relationships and Other Business Matters .................................................................... 57
Future Legislation ......................................................................................................................... 62
Maintenance of the Tax-Exempt Status of the Members of the Obligated Group ........................ 62
Charity Care, Underinsured and Uninsured Patients .................................................................... 65
Enforceability of Certain Covenants in the Master Indenture ...................................................... 66
Enforcement of Remedies; Risks of Bankruptcy .......................................................................... 67
Certain Other Matters Relating to Security for the Series 2015A Bonds ..................................... 68
Restrictions on Aspirus Wausau Hospital Site ............................................................................. 69
Future Plans of the Obligated Group ............................................................................................ 69
Event of Taxability ....................................................................................................................... 69
Other Risk Factors ........................................................................................................................ 70
Bond Ratings ................................................................................................................................. 71
Market for the Series 2015A Bonds .............................................................................................. 71
LITIGATION ............................................................................................................................................. 71
The Authority ................................................................................................................................ 71
The Obligated Group .................................................................................................................... 71
TAX EXEMPTION ................................................................................................................................... 71
In General ..................................................................................................................................... 71
Federal Income Tax Opinion of Bond Counsel ............................................................................ 72
Other Federal Income Tax Considerations ................................................................................... 72
Wisconsin Income Tax ................................................................................................................. 72
Original Issue Discount ................................................................................................................. 72
Bond Premium .............................................................................................................................. 73
CONTINUING DISCLOSURE UNDERTAKING ................................................................................... 74
UNDERWRITING .................................................................................................................................... 75
RATINGS .................................................................................................................................................. 76
INDEPENDENT AUDITORS ................................................................................................................... 76
FINANCIAL ADVISOR ........................................................................................................................... 76
INTERIM FINANCIAL STATEMENTS ................................................................................................. 76
LEGAL MATTERS ................................................................................................................................... 77
RELATIONSHIP OF CERTAIN PARTIES ............................................................................................. 77
MISCELLANEOUS .................................................................................................................................. 77

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TABLE OF CONTENTS
(continued)

APPENDIX A The Aspirus System
APPENDIX B-1 Audited Consolidated Financial Statements and Supplementary Information of
Aspirus, Inc. and Subsidiaries as of and for the fiscal years ended June 30, 2014 and
2013 with Reports of Independent Auditors
APPENDIX B-2 Audited Financial Statements of Aspirus Medford Hospital & Clinics, Inc. as of and
for the fiscal years ended June 30, 2014 and 2013 with Report of Independent
Auditors
APPENDIX B-3 Audited Financial Statements of Langlade Hospital – Hotel Dieu of St. Joseph of
Antigo, Wisconsin as of and for the fiscal years ended June 30, 2014 and 2013 with
Report of Independent Auditors
APPENDIX B-4 Audited Consolidated Financial Statements and Supplementary Information of
Aspirus Keweenaw and Subsidiary as of and for the fiscal years ended June 30, 2014
and 2013 with Report of Independent Auditors
APPENDIX B-5 Audited Financial Statements of Aspirus NorthStar, Inc. as of and for the fiscal years
ended December 31, 2014 and 2013 with Report of Independent Auditors
APPENDIX B-6 Audited Financial Statements of Riverview Hospital Association as of and for the
fiscal years ended August 31, 2014 and 2013 with Report of Independent Auditors
APPENDIX C Summary of Certain Provisions of the Master Indenture
APPENDIX D Summary of the Bond Indenture and Loan Agreement
APPENDIX E Form of Bond Counsel Opinion
APPENDIX F Form of Master Continuing Disclosure Undertaking
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OFFICIAL STATEMENT
relating to

$42,975,000
Wisconsin Health and Educational Facilities Authority
Revenue Bonds, Series 2015
(Aspirus, Inc. Obligated Group)

INTRODUCTION
Purpose of this Official Statement
This Official Statement, including the cover page and Appendices, is furnished in connection with
the offering of $42,975,000 in aggregate principal amount of Revenue Bonds, Series 2015A (Aspirus, Inc.
Obligated Group) (the “Series 2015A Bonds”) of the Wisconsin Health and Educational Facilities Authority
(the “Authority”), public body politic and corporate organized under the laws of the State of Wisconsin (the
“State”). The Series 2015A Bonds will be issued in accordance with the provisions of Chapter 231 of the
Wisconsin Statutes, as from time to time amended (the “Act”). Certain capitalized terms used in this Official
Statement and not otherwise defined herein are defined in Appendix C and Appendix D.
The Obligated Group and the Master Indenture
Aspirus, Inc. (the “Parent Corporation”), Aspirus Wausau Hospital, Inc. (“Aspirus Wausau”),
Aspirus Medford Hospital & Clinics, Inc. (“Aspirus Medford”), Aspirus Clinics, Inc. (“Aspirus Clinics”),
Langlade Hospital – Hotel Dieu of St. Joseph of Antigo Wisconsin (“Langlade Hospital”), Aspirus Grand
View (“Aspirus Grandview”) and Aspirus Grand View Service Corporation (“AGVSC”) are the current
members of an obligated group (the “Existing Obligated Group Members”) established under a Restated
Master Trust Indenture dated as of February 29, 2012, as previously supplemented and amended by
Supplemental Master Trust Indenture No. dated February 29, 2012 and by Supplemental Master Trust
Indentures Nos. 2 and 3 (as so supplemented and amended, the “Restated Master Indenture”), among the
Existing Obligated Group Members and U.S. Bank National Association, as master trustee (the “Master
Trustee”).
The issuance of the Series 2015A Bonds is contingent upon Aspirus Health Foundation, Inc., Aspirus
Riverview Hospital & Clinics, Inc. (formerly known as Riverview Hospital Association) (“Aspirus
Riverview”), Aspirus Ontonagon Hospital, Inc., Aspirus Keweenaw (“Aspirus Keweenaw”) and Aspirus
NorthStar, Inc. (“Aspirus NorthStar”) (collectively, the “New Material Obligated Group Members”) joining
the Obligated Group simultaneously with the issuance of the Series 2015A Bonds. Management of the
System also expects that Aspirus Buildings, Inc. (“Aspirus Buildings”), Aspirus Extended Services, Inc.,
Aspirus VNA Home Health, Inc. and Aspirus VNA Extended Care (collectively, the “Other New Obligated
Group Members”) will join the Obligated Group simultaneously with the issuance of the Series 2015A
Bonds. The Existing Obligated Group Members, the New Material Obligated Group Members and the Other
New Obligated Group Members (to the extent such Members join the Obligated Group simultaneously with
the issuance of the Series 2015A Bonds) are referred to herein collectively as the “Obligated Group
Members,” the “Obligated Group” or the “Members of the Obligated Group” and individually as an
“Obligated Group Member” or a “Member.” See Appendix A herein for a more detailed description of the
Members of the Obligated Group and their history, organization, facilities and financial performance.
In connection with the issuance of the Series 2015A Bonds and the addition of the New Obligated
Group Members to the Obligated Group, each Obligated Group Member will execute and deliver that certain
1
Supplemental Master Trust Indenture No. 4 dated as of May 1, 2015 (“Supplemental Master Indenture No.
4”) among the Obligated Group and the Master Trustee, (“Supplemental Master Indenture No. 4” and,
together with the Restated Master Indenture, the “Master Indenture”) between the Parent Corporation, as
Obligated Group Representative, the New Obligated Group Members and the Master Trustee.
Pursuant to Supplemental Master Trust Indenture No. 3, the Obligated Group has proposed certain
amendments to the Master Indenture (the “Proposed Amendments”). By purchasing the Series 2015A
Bonds, the owners thereof will be deemed to have consented to the Proposed Amendments, which will then
become effective. See “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE –
SUMMARY OF CERTAIN PROVISIONS OF SUPPLEMENTAL MASTER TRUST INDENTURE NO. 4”
in Appendix C hereto.
Each Obligated Group Member is jointly and severally liable for the payment of principal and
interest on all Obligations issued under the Master Indenture. However, certain uncertainties as to
enforceability of the covenant of each Member of the Obligated Group in the Master Indenture to be jointly
and severally liable for each Obligation, as described under “BONDHOLDERS’ RISKS – Enforceability of
Certain Covenants in the Master Indenture.” Notwithstanding such uncertainty, the accounts of the Members
of the Obligated Group and any future Members of the Obligated Group will be combined for financial
reporting purposes and will be used in determining whether various covenants and tests contained in the
Master Indenture are met. As described in Appendix A hereto, the Parent Corporation maintains sole
indirect or direct control or holds a majority interest in each Member of the Obligated Group other than:
Aspirus Medford (Parent Corporation holds a 50% interest), Langlade Hospital (Parent Corporation holds a
45% interest) and Aspirus Keweenaw (Parent Corporation holds a 50% interest). Each member is exempt
from federal income taxation by virtue of being an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the “Code”) and is either a Wisconsin nonstock, nonprofit corporation
or a Michigan nonstock corporation, depending on the location of its operations.
With the exception of the addition of the New Obligated Group Members, there is no current
intention to alter the current composition of the Obligated Group in the immediately foreseeable future.
However, pursuant to the Master Indenture, other entities may become members of the Obligated Group and
members, other than Aspirus Wausau, may withdraw from the Obligated Group from time to time, in
accordance with the applicable provisions of the Master Indenture, which may be amended with the consent
of the holders of not less than a majority in aggregate principal amount of Outstanding Obligations. See
“SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – Supplemental Master
Indenture – Supplemental Master Indenture Requiring Consent of Obligation Holders” in Appendix C to this
Official Statement.
Unaudited financial information for the System for its 2013 and 2014 fiscal years is attached as
Exhibit A to Appendix A. Such information is derived from: (1) the audited consolidated financial
statements of Aspirus, Inc. and Subsidiaries (the “Aspirus Consolidated Entities”) as of and for the fiscal
years ended June 30, 2014 and 2013, which are included in Appendix B-1 to this Official Statement; (2) the
audited financial statements of Aspirus Medford as of and for the fiscal years ended June 30, 2014 and 2013,
which are included in Appendix B-2 to this Official Statement; (3) the audited financial statements of
Langlade Hospital as of and for the fiscal years ended June 30, 2014 and 2013, which are included in
Appendix B-3 to this Official Statement; (4) the audited consolidated financial statements of Aspirus
Keweenaw and Subsidiary as of and for the years ended June 30, 2014 and 2013, which are included in
Appendix B-4; (5) the audited financial statements of Aspirus NorthStar as of and for the years ended
December 31, 2014 and 2013, which are included in Appendix B-5 to this Official Statement; and (5) the
audited financial statements of Riverview Hospital Association as of and for the years ended August 31,
2014 and 2013 which are included in Appendix B-6 to this Official Statement. Certain of the above-
described financial statements include entities that are not Members of the Obligated Group and are not
obligated for payment of Obligation No. 11 or with respect to the Series 2015A Bonds. As of and for the
2
twelve month period ended June 30, 2014, such entities that are not Members of the Obligated Group
accounted for less than 1% of the total assets and net assets and approximately 1.4% of the total revenue of
the System.
Purpose of the Series 2015A Bonds
The proceeds of the Series 2015A Bonds, together with certain other moneys, will be applied by the
Series 2015A Borrowers (as defined herein) to (i) advance refund the Series 2008 Bonds (as defined herein),
and (ii) pay and reimburse Aspirus Keweenaw for, and refinance an interim taxable loan, the proceeds of
which were used for, the costs of the acquisition, construction, renovation and equipping of its facilities. See
“PLAN OF FINANCING” herein.
Principal Documents
The Series 2015A Bonds are being issued under the terms of a Bond Trust Indenture, dated as of
May 1, 2015 (the “Bond Indenture”), between the Authority and The Bank of New York Mellon Trust
Company, N.A., as bond trustee (the “Bond Trustee”). The proceeds from the sale of the Series 2015A
Bonds will be loaned by the Authority pursuant to two separate loans to each of Aspirus Keweenaw and
Aspirus Riverview (the “Series 2015A Borrowers”) made pursuant to a Loan Agreement dated as of May 1,
2015 (the “Loan Agreement”) among the Authority, the Parent Corporation and the Series 2015A Borrowers.
As security for the principal and interest payments due from the Series 2015A Borrowers under the
Loan Agreement, the Obligated Group will issue its Obligation No. 11 (the “Obligation No. 11”). Obligation
No. 11 is payable to the Authority and provides for payments sufficient to pay when due the principal of,
premium, if any, and interest on the Series 2015A Bonds. Obligation No. 11 will be issued pursuant to the
Master Indenture. The Authority will pledge and assign Obligation No. 11 and certain of its rights under the
Loan Agreement to the Bond Trustee as security for the Series 2015A Bonds.
Concurrent Issuance of the 2015 Tax-Exempt Loan
As part of the plan of financing that includes the issuance of the Series 2015A Bonds, management
anticipates that Barclays Bank PLC (“Barclays”) will make a tax-exempt loan to the Authority in the
aggregate principal amount of $33,685,000, and the Authority will loan the proceeds of such loan to the 2015
Borrowers (as defined below) (such transaction hereinafter referred to as the “2015 Tax-Exempt Loan”). The
2015 Borrowers will use the proceeds of the 2015 Tax-Exempt Loan, together with certain other moneys, to
(i) advance refund the Series 2010 Bonds (as defined herein), and (ii) refinance certain outstanding
indebtedness of Aspirus NorthStar, the proceeds of which were used to redeem a series of tax-exempt bonds
issued on behalf of Aspirus NorthStar. See “PLAN OF FINANCING” herein.
The issuance of the Series 2015A Bonds is not contingent upon the issuance of the 2015 Tax-
Exempt Loan.
The 2015 Tax-Exempt Loan will be made pursuant to the terms of a Loan Agreement (the “2015
Tax-Exempt Loan Agreement”) by and among the Authority, Barclays, the Parent Corporation, as Obligated
Group Representative, and Aspirus NorthStar and Aspirus Riverview (collectively, the “2015 Borrowers”).
As security for the principal and interest payments due from the 2015 Borrowers under the 2015 Tax-Exempt
Loan Agreement, the Obligated Group will issue its Obligation No. 12 (the “Obligation No. 12”). Obligation
No. 12 will be payable to the Authority and provide for payments sufficient to pay when due the principal of,
premium, if any, and interest on the 2015 Tax-Exempt Loan. Obligation No. 12 will be issued pursuant to
the Master Indenture, and the Authority will pledge and assign Obligation No. 12 and certain of its rights
under the 2015 Tax-Exempt Loan Agreement to the Lender (as defined in the 2015 Tax-Exempt Loan
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Agreement) pursuant to the terms of an Assignment Agreement dated as of May 1, 2015 as security for the
2015 Tax-Exempt Loan.
The 2015 Tax-Exempt Loan will bear interest at a LIBOR-based variable rate, and will have a
maturity date of August 15, 2039 and is subject to mandatory purchase on August 15, 2022. Pursuant to the
terms of the 2015 Tax-Exempt Loan Agreement, the Lender will have the option to extend the mandatory
purchase date for the 2015 Tax-Exempt Loan, and hold the 2015 Tax-Exempt Loan at a LIBOR-based
variable rate for an additional period and upon such other terms agreed to between the 2015 Borrowers and
the Lender. On the initial mandatory purchase date or any subsequent mandatory purchase date, if the
Lender has not exercised its option to extend such mandatory purchase date, the 2015 Borrowers will be
required to purchase the 2015 Tax-Exempt Loan from the Lender at a purchase price equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon.
Upon the occurrence of an event of default under the 2015 Tax-Exempt Loan Agreement, the Lender
may accelerate the 2015 Tax-Exempt Loan and pursue any rights and remedies it may have under the Master
Indenture and Obligation No. 12, including, with respect to payment defaults, acceleration of all Obligations
issued under the Master Indenture, including Obligation No. 11. See below under the caption “SECURITY
FOR THE BONDS – Additional Covenants Not Enforceable by Bond Trustee.”
Security
The Series 2015A Bonds are not a debt or liability of the State of Wisconsin or any political
subdivision or agency thereof other than the Authority to the extent provided herein. The Series 2015A
Bonds are limited obligations of the Authority payable solely from revenues received by the Bond Trustee
for the account of the Authority under the Loan Agreement and the Bond Indenture.
The Loan Agreement requires each Series 2015A Borrower to pay debt service based on its pro rata
share of the Series 2015A Bonds. All obligations of the Series 2015A Borrower under the Loan Agreement
are secured by Obligation No. 11 issued under the Master Indenture.
Obligation No. 11will be pledged to the Bond Trustee to secure payment of the Series 2015A Bonds.
Obligation No. 11 is the full, unlimited, joint and several obligation of the Obligated Group issued on a parity
basis with all other Outstanding Obligations. The obligations of the Obligated Group under the Master
Indenture are general obligations of the Obligated Group and, other than the pledge of the Unrestricted
Receivables (as defined in Appendix C) of the Obligated Group, are not secured by any liens on real property
or other assets of any Obligated Group Member. The terms of Obligation No. 11 will require payments by
the Obligated Group Members that are sufficient to provide for the timely payment of the principal of,
premium, if any, and interest on the Series 2015A Bonds. Except as described in the following paragraph,
Obligation No. 11 will entitle the Bond Trustee, as the holder thereof, to the protection of the covenants,
restrictions and other obligations imposed by the Master Indenture upon the Obligated Group Members. See
“SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2015A BONDS.”
Under the circumstances described in the Bond Indenture, Obligation No. 11 and/or any notes or
obligations pledged under the Bond Indenture in addition to or in substitution for the original Obligation No.
11(the “Pledged Obligations”) may be exchanged for the obligations of a different obligated group
(“Substitute Obligations”). This could, under certain circumstances, lead to the substitution of different
security in the form of Substitute Obligations backed by an obligated group that is financially and
operationally different than the then current Members of the Obligated Group. Such new obligated group
could have substantial debt outstanding that would rank on a parity with the Substitute Obligations. Such
exchange could adversely affect the market price for and marketability of the Series 2015A Bonds. In order
to so exchange the Pledged Obligations, the Obligated Group must meet certain requirements, as described in
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