WEST
READING, Pa., Aug. 16,
2024 /PRNewswire/ -- Tower Health ("Tower
Health") today announced that it has commenced an offer to
exchange (the "Exchange Offer") all or any portion of
certain outstanding debt securities issued by or on behalf of Tower
Health described in the table below (collectively, the
"Outstanding Bonds") for a specified amount of new
bonds to be issued by The Berks County Municipal Authority (the
"Authority"), as identified in the table below
(collectively, the "Exchange Bonds"). The Exchange
Offer is being made to realign the debt structure of Tower Health
and the other members of the Obligated Group (as defined below) and
their affiliates to support their acute care hospitals and related
healthcare businesses.
The Exchange Offer is further described in the Offer to Exchange
and Consent Solicitation Statement dated August 16, 2024 (the "Offer to Exchange and
Consent Solicitation Statement") and is subject to the
terms and conditions set forth therein. Information
concerning Tower Health and the other members of the Obligated
Group and the Exchange Bonds is set forth in the Authority's
Preliminary Limited Offering Memorandum dated August 16, 2024 (the "Limited Offering
Memorandum") attached as APPENDIX A to the Offer to
Exchange and Consent Solicitation Statement.
In connection with the Exchange Offer, Tower Health is also
soliciting consents ("Consents") from holders of
Outstanding Bonds, upon the terms and subject to the conditions set
forth in the Offer to Exchange and Consent Solicitation Statement,
to amend and restate the Master Trust Indenture supporting the
Outstanding Bonds (the "Consent Solicitation").
Bondholders who tender their Outstanding Bonds in the Exchange
Offer will be deemed to have delivered their Consents pursuant to
the Consent Solicitation and may not deliver Consents pursuant to
the Consent Solicitation without tendering their Outstanding Bonds
in the Exchange Offer.
The following table sets forth the Exchange Amount of each
series of Exchange Bonds per each series of Outstanding Bonds:
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Series of Exchange
Bonds
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The Berks County
Municipal
Authority Revenue Bonds (Tower
Health Project), Series 2024A-3
(the "Series
2024A-3 Bonds")
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The Berks County
Municipal Authority Revenue
Bonds (Tower Health Project), Series 2024B-1
(the "Series
2024B-1 Bonds")
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Series of
Outstanding
Bonds
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CUSIPS1
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Outstanding
Principal
Amount
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Exchange
Principal
Amount per
$1,000
Principal
Amount2
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Interest
Rate
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Maturity
Date
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Exchange
Initial
Principal
Amount per
$1,000
Principal
Amount3
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Exchange
Final
Accreted
Value per
$1,000
Principal
Amount
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Interest
Rate4
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Maturity
Date
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Berks County
Municipal
Authority Series
2012A Fixed Rate
Revenue Bonds
(The Reading
Hospital and
Medical Center
Project) (the
"Series 2012A
Bonds")
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084538GV3
084538GW1
084538GY7
084538GX9
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$160,065,000
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$700
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5.0 %
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June 30,
2039
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$300
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$349.82
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3.0%/6.0%
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June 30,
2044
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Berks County
Industrial
Development
Authority Series
2017 Health
System Revenue
Bonds (Tower
Health Project)
(the "Series 2017
Bonds")
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08451PAD3
08451PAE1
08451PAF8
08451PAG6
08451PAH4
08451PAJ0
08451PAK7
08451PAL5
08451PAM3
08451PAN1
08451PAP6
08451PAQ4
08451PAR2
08451PAS0
08451PAT8
08451PAU5
08451PAV3
08451PAW1
08451PAX9
08451PAZ4
08451PAY7
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$579,745,000
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$700
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5.0 %
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June 30,
2039
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$300
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$349.82
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3.0%/6.0%
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June 30,
2044
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Berks County
Municipal
Authority Series
2020A Revenue
Bonds (Tower
Health Project)
(the "Series
2020A Bonds")
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084538HS9
084538HT7
084538HU4
084538HV2
084538HW0
084538HX8
084538HY6
084538HZ3
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$27,410,000
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$700
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5.0 %
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June 30,
2039
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$300
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$349.82
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3.0%/6.0%
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June 30,
2044
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Berks County
Municipal
Authority Series
2020B-1 Revenue
Bonds (Tower
Health Project)
(the "Series
2020B-1 Bonds")
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084538JA6
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$64,565,000
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$750
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5.0 %
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June 30,
2039
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$250
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$291.51
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3.0%/6.0%
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June 30,
2044
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Berks County
Municipal
Authority Series
2020B-2 Revenue
Bonds (Tower
Health Project)
(the "Series
2020B-2 Bonds")
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084538JB4
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$82,450,000
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$700
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5.0 %
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June 30,
2039
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$300
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$349.82
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3.0%/6.0%
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June 30,
2044
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Berks County
Municipal
Authority Series
2020B-3 Revenue
Bonds (Tower
Health Project)
(the "Series
2020B-3 Bonds")
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084538JC2
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$72,920,000
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$700
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5.0 %
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June 30,
2039
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$300
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$349.82
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3.0%/6.0%
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June 30,
2044
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Series of Exchange
Bonds
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The Berks County
Municipal
Authority Federally Taxable Revenue
Bonds (Tower Health Project), Series
2024A-4
(the "Series
2024A-4 Bonds")
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The Berks County
Municipal Authority Federally
Taxable Revenue Bonds (Tower Health Project),
Series 2024B-2 (the "Series 2024B-2 Bonds")
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Series of
Outstanding
Bonds
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CUSIPS1
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Outstanding
Principal
Amount
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Exchange
Principal
Amount per
$1,000
Principal
Amount5
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Interest
Rate
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Maturity
Date
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Exchange
Initial
Principal
Amount per
$1,000
Principal
Amount6
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Exchange
Final
Accreted
Value per
$1,000
Principal
Amount
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Interest
Rate7
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Maturity
Date
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Tower Health
Taxable Bonds
Series 2020 (the
"Series 2020
Taxable Bonds")
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891792AA1
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$190,720,000
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$700
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7.0 %
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June 30,
2039
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$300
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$368.01
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4.0%/8.0%
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June 30,
2044
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____________________
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1.
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CUSIP is a registered
trademark of the American Bankers Association. CUSIP data herein is
provided by CUSIP Global Services, which is managed on behalf of
the American Bankers Association by FactSet Research Systems Inc.
This data is not intended to create a database and does not serve
in any way as a substitute for the CUSIP Services. CUSIP numbers
are provided for convenience of reference only. None of Tower
Health, the Authority, BofA Securities, Inc. (the "Dealer
Manager"), Globic Advisors (the "Information and
Exchange Agent") or their respective agents or counsel
assume responsibility for the accuracy of such numbers.
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2.
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The principal amounts
of the Series 2024A-3 Bonds to be issued in exchange for each
$1,000 principal amount of the applicable series of Outstanding
Bonds (the "Series 2024A-3 Exchange Principal
Amounts") will be an amount determined by multiplying the
$1,000 principal amount of such series of Outstanding Bonds by (a)
70%, in the case of the Series 2012A Bonds, Series 2017 Bonds,
Series 2020A Bonds, Series 2020B-2 Bonds and Series 2020B-3 Bonds,
and (b) 75%, in the case of the Series 2020B-1 Bonds.
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3.
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Represents the initial
principal amounts of the Series 2024B-1 Bonds. The initial
principal amounts of the Series 2024B-1 Bonds to be issued in
exchange for each $1,000 principal amount of the applicable series
of Outstanding Bonds (the "Series 2024B-1 Exchange Initial
Principal Amounts") will be an amount determined by
multiplying the $1,000 principal amount of such series of
Outstanding Bonds by (a) 30%, in the case of the Series 2012A
Bonds, Series 2017 Bonds, Series 2020A Bonds, Series 2020B-2 Bonds
and Series 2020B-3 Bonds, and (b) 25%, in the case of the Series
2020B-1 Bonds.
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4.
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The Series 2024B-1
Bonds will accrete interest at 3.0% per annum to November 15, 2029
and accrue interest at 6.0% thereafter.
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5.
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The principal amount of
the Series 2024A-4 Bonds to be issued in exchange for each $1,000
principal amount of the Series 2020 Taxable Bonds (the
"Series 2024A-4 Exchange Principal Amount") will be
an amount determined by multiplying the $1,000 principal amount of
the Series 2020 Taxable Bonds by 70%.
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6.
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Represents the initial
principal amount of the Series 2024B-2 Bonds. The initial
principal amount of the Series 2024B-2 Bonds to be issued in
exchange for each $1,000 principal amount of the Series 2020
Taxable Bonds (the "Series 2024B-2 Exchange Initial Principal
Amount" and, together with the Series 2024A-3 Exchange
Principal Amounts, the Series 2024B-1 Exchange Initial Principal
Amounts and the Series 2024A-4 Exchange Principal Amount, the
"Exchange Amounts") will be an amount determined by
multiplying the $1,000 principal amount of the Series 2020 Taxable
Bonds by 30%.
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7.
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The Series 2024B-2
Bonds will accrete interest at 4.0% per annum to November 15, 2029
and accrue interest at 8.0% thereafter.
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If the principal amount of the applicable series of Series
2024A-3 Bonds or Series 2024A-4 Bonds or Final Accreted Value (as
defined in the Limited Offering Memorandum) after the accretion
period of Series 2024B-1 Bonds or
Series 2024B-2 Bonds that a
bondholder would be entitled to receive would not be an integral
multiple of $1,000, such principal
amount or Final Accreted Value of the applicable series of Exchange
Bonds to be delivered to the bondholder will be as follows:
(i)
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the principal amount of
the Series 2024A-3 Bonds or Series 2024A-4 Bonds, as applicable,
will be rounded to the nearest $1,000 denomination as follows: (a)
amounts equal to or greater than $500 will be rounded to the next
higher $1,000 increment and (b) amounts less than $500 will be
rounded to the next lower $1,000 increment; and
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(ii)
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the Final Accreted
Value of the Series 2024B-1 Bonds or Series 2024B-2 Bonds, as
applicable, will be rounded to the nearest $1,000 denomination as
follows: (a) amounts equal to or less than $500 will be rounded to
the next lower $1,000 increment and (b) amounts greater than $500
will be rounded to the next higher $1,000 increment.
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Subject to the terms and conditions of the Exchange Offer, Tower
Health will cause the exchange of Exchange Bonds for Outstanding
Bonds tendered for exchange, provided that such Outstanding Bonds
(i) tendered for exchange for Exchange Bonds have been validly
tendered by 5:00 p.m., New York City time, on September 13, 2024 (as it may be extended from
time to time, the "Expiration Date") by holders
thereof and accepted by Tower Health at or before 5:00 p.m., New York
City time, on September 16,
2024 (as it may be extended from time to time, the
"Acceptance Date"), assuming all conditions to the
Exchange Offer have then been satisfied or waived by Tower Health
on or prior to September 19, 2024 (as
it may be extended from time to time, the "Settlement
Date"). Bondholders who tender Outstanding Bonds at or
prior to 5:00 p.m., New York City time, on the Expiration Date,
and whose Outstanding Bonds are accepted for exchange at or prior
to 5:00 p.m., New York City time, on the Acceptance Date,
will be entitled to receive accrued but unpaid interest on such
Outstanding Bonds to, but not including, the Settlement Date.
Concurrently with the Exchange Offer, the Authority is offering
$157.5 million aggregate principal
amount of its (i) 8.0% Federally Taxable Revenue Bonds (Tower
Health Project), Series 2024A-1 (the "Series 2024A-1
Bonds") and (ii) tax-exempt 6.0% Revenue Bonds (Tower
Health Project), Series 2024A-2 (the "Series 2024A-2
Bonds" and, together with the Series 2024A-1 Bonds, the
"Series 2024A-1/A-2 Bonds" and the Series 2024A-1/A-2
Bonds, collectively with the Exchange Bonds, the "Series
2024A/B Bonds") anticipated to be issued and sold on the
Settlement Date to holders of Outstanding Bonds as of August 29, 2024. The Series 2024A/B Bonds will be
issued in the manner, on the terms and with the security therefor
described in the Limited Offering Memorandum. The exchange of any
Outstanding Bonds tendered pursuant to the Exchange Offer is
contingent on the issuance and sale of the Series 2024A-1/A-2 Bonds
and Exchange Bonds by the Authority. The Exchange Offer and
the issuance and sale of the Series 2024A-1/A-2 Bonds by the
Authority is collectively referred to herein as the
"Refinancing Transaction."
As previously disclosed, on May 31,
2024, Tower Health entered into a transaction support
agreement, with accompanying term sheet (together, as amended,
modified or otherwise supplemented, the "Transaction Support
Agreement"), among Tower Health, on behalf of itself and
the other members of the Obligated Group, the master trustee under
the Master Trust Indenture supporting the Outstanding Bonds and an
ad hoc group (the "Ad Hoc Group") of holders
of approximately 84% of the Outstanding Bonds. The
Transaction Support Agreement contemplates, among other things:
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The issuance and sale
of the Series 2024A-1/A-2 Bonds described in the Limited Offering
Memorandum to holders of Outstanding Bonds, and the backstop of
that issuance by members of the Ad Hoc Group.
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•
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The Exchange Offer, in
which the members of the Ad Hoc Group committed to participate,
wherein holders who tender their Outstanding Bonds, and whose
Outstanding Bonds are accepted for exchange, will receive in the
aggregate a like principal amount of Exchange Bonds.
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•
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The Consent
Solicitation to facilitate the Exchange Offer, the issuance of the
Series 2024A-1/A-2 Bonds and related transactions and to amend
certain covenants included in the Master Trust Indenture supporting
the Outstanding Bonds, including those relating to permitted liens,
permitted indebtedness, Debt Service Coverage Ratio, asset
dispositions and financial reporting, to align with the covenants
under the new Master Trust Indenture supporting the Series
2024A-1/A-2 Bonds and the Exchange Bonds.
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The Outstanding Bonds exchanged in the Exchange Offer will be
retired or cancelled and will not be reissued. Holders of
Outstanding Bonds who do not participate in the Exchange Offer, as
well as holders of Outstanding Bonds who tender Outstanding Bonds
for exchange that Tower Health chooses not to accept, will continue
to hold such Outstanding Bonds in their account unchanged by virtue
of the Exchange Offer.
The Outstanding Bonds were issued, and the Series 2024A/B Bonds
will be issued, for the benefit of Tower Health and certain of its
affiliates that constitute the "Obligated
Group." The Obligated Group includes Tower Health,
Reading Hospital, Brandywine Hospital, LLC, Chestnut Hill Hospital,
LLC, Jennersville Hospital, LLC, Phoenixville Hospital, LLC and
Pottstown Hospital, LLC. Tower Health serves as the parent
organization of the other Obligated Group members. For
certain information concerning the Obligated Group, see the Limited
Offering Memorandum.
To make an informed decision as to whether, and how, to tender
Outstanding Bonds for exchange pursuant to the Exchange Offer and
deliver Consents pursuant to the Consent Solicitation, bondholders
should read the Offer to Exchange and Consent Solicitation
Statement, including the Limited Offering Memorandum, carefully and
consult with their brokers, account executives, financial advisors,
attorneys and/or other professionals.
The Offer to Exchange and Consent Solicitation Statement and
Limited Offering Memorandum are available electronically on the
website of the Information and Exchange Agent at
www.globic.com/towerhealth, as well as the Municipal Securities
Rulemaking Board through its Electronic Municipal Market Access
("EMMA") website, located at http://emma.msrb.org,
using the CUSIP numbers for the Outstanding Bonds. Upon
expiration of the Exchange Offer, Tower Health will post notices
regarding the results of the Exchange Offer on these same
websites.
BofA Securities, Inc. is acting as Dealer Manager for the
Exchange Offer. Investors with questions about the Exchange Offer
and Consent Solicitation should contact the Dealer Manager at (646)
743-1362 or by email: dg.muni-lm@bofa.com. Investors and their
brokers, account executives, financial advisors and/or other
appropriate professionals with questions about the Exchange Offer
may also contact the Information and Exchange Agent, Robert Stevens of Globic Advisors, at: (212)
227-9699 or by email: rstevens@globic.com.
Tower Health retains the right to cancel or modify the Exchange
Offer at any time on or prior to the Expiration Date, as more fully
described in the Offer to Exchange and Consent Solicitation
Statement.
This announcement is for informational purposes only. This
announcement is not an offer to sell or purchase or a
solicitation of an offer to sell or purchase any Outstanding Bonds
or Series 2024A/B Bonds. The Exchange Offer is not being made
to, and Outstanding Bonds tendered in response to the Exchange
Offer will not be accepted from or on behalf of, bondholders in any
jurisdiction in which such offer or such acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any
jurisdictions where the securities, "blue sky" or other laws
require the Exchange Offer to be made through a licensed or
registered broker or dealer, the Exchange Offer shall be deemed to
be made on behalf of Tower Health through the Dealer Manager or one
or more registered brokers or dealers licensed under the laws of
that jurisdiction.
About Tower Health
Tower Health is a regional integrated healthcare system that
offers compassionate, high-quality, leading-edge healthcare and
wellness services to communities in Berks, Chester, Montgomery, and Philadelphia Counties. With over 10,000 team
members and a combined 1,200 beds, Tower Health consists of Reading
Hospital in West Reading;
Phoenixville Hospital in Phoenixville; Pottstown Hospital in
Pottstown; and St. Christopher's
Hospital for Children in Philadelphia, in partnership with Drexel University. Tower Health is strongly
committed to academic medicine and training, including multiple
residency and fellowship programs, the Drexel
University College of Medicine at Tower Health, and the
Reading Hospital School of Health Sciences in West Reading. The system also includes Reading
Hospital Rehabilitation at Wyomissing; home healthcare provided by Tower
Health at Home; TowerDIRECT ambulance and emergency response; Tower
Health Medical Group; Tower Health Providers, our clinically
integrated network; and Tower Health Urgent Care facilities across
our service area.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains certain "forward-looking statements"
within the meaning of the U.S. federal securities laws. These
statements can be identified by the use of words or phrases such as
"expects," "estimates," "projects," "budgets," forecasts,"
"anticipates," "intends," "plans," "may," "will," "could,"
"should," "believes," "predicts," "potential," "continue," and
similar expressions. These statements are subject to significant
known and unknown risks and uncertainties that could cause actual
results to differ materially from those stated in, and implied by,
this notice. These factors are outside of Tower Health's control
and difficult to predict and manage. Factors that could cause
actual results to vary materially from Tower Health's expectations
include: (i) Tower Health's ability to succeed in the Refinancing
Transaction; (ii) the failure of any conditions specified in the
agreements among Tower Health and the Ad Hoc Group to be satisfied
or waived; (iii) Tower Health's ability to effectively manage its
operations during the significant cash flow and liquidity
difficulties it is currently experiencing until such time as the
Refinancing Transaction can be consummated; (iv) negative events or
publicity associated with Tower Health's refinancing efforts; and
(v) the negative consequences if Tower Health is unsuccessful in
achieving the benefits of the Refinancing Transaction. All
forward-looking statements speak only as of the date they are made
and reflect Tower Health's good faith beliefs, assumptions and
expectations, but they are not guarantees of future performance or
events. Furthermore, Tower Health disclaims any obligation to
publicly update or revise any forward-looking statement, except as
required by law. By their nature, forward-looking statements
are subject to risks and uncertainties that could cause actual
results to differ materially from those suggested by the
forward-looking statements. Tower Health files annual and
quarterly reports and other financial information with EMMA.
You may access Tower Health's public filings on EMMA at
emma.msrb.org. Tower Health's website address is
towerhealth.org.
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SOURCE Tower Health