August 22, 2013

Maine to sell $220M liquor revenue bond next week

The state plans to use the proceeds of the bond offering to repay debt owed to Maine's 39 hospitals.

By Jessica Hall jhall@pressherald.com
Staff Writer

AUGUSTA — The Maine Municipal Bank will sell a $220 million bond next week, which will be backed by the revenues produced by the planned state liquor contract.

The state aims to send out requests for proposals in September for companies to bid to run the state liquor operations. The new liquor contract is scheduled to begin July 1, 2014. The current contract is held by Maine Beverage Co.

Debt-rating agencies Standard and Poor’s and Moody’s Investors Service have assigned credit ratings on the proposed liquor operation revenue bond. S&P has assigned its "A+" rating, with a stable outlook. Moody’s assigned their "A1" rating, with a stable outlook.

The revenue bond will be used to repay $183.5 million in welfare debt that the state owes to Maine hospitals. That payment will trigger a federal match of $305 million.

A portion of the proceeds will also be used for interest payments and to fund a reserve fund, Moody's said in a report. The bonds are expected to have a final maturity in 2024.

“As a result of these new bond ratings, our administration is one step closer to repaying Maine’s hospitals the $484 million in welfare debt that is owed to them,” Gov. Paul LePage said in a statement.

In May, both Moody’s and S&P cited the state’s Medicaid program, known as MaineCare, and the outstanding hospital debt as hindering the state’s bond rating.

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