September 3, 2013

Maine bond sale to pay off old debt to hospitals

A federal payment of $305 million will be added, then the state liquor contract revenue will cover the bond.

By Jessica Hall jhall@pressherald.com
Staff Writer

AUGUSTA — The state has sold a $220 million liquor revenue bond and will use the proceeds to pay its $183.5 million debt to Maine's hospitals for Medicaid reimbursements.

The state's payment will trigger a federal payment of $305 million. Maine's 39 hospitals are just weeks away from receiving the money.

"This is good news for these employers and their local communities," Gov. Paul LePage said in a prepared statement.

The state will request proposals this month from companies who want to run the state's wholesale liquor operation. The winning bidder's payments to the state will be used to pay off the $220 million bond.

The new contract is scheduled to begin July 1, 2014. The current contract is held by Maine Beverage Co.

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

The $220 million bond received a total interest cost of 3.79 percent, the state said.

Some of the bond proceeds will be used for interest payments and for a reserve fund, Moody's said in a report. The bonds have a final maturity in 2024.

"High demand from investors helped drive the interest rate down," said Mike Goodwin, executive director of the Maine Municipal Bond Bank. "The interest shown by investors and the positive ratings received from the rating agencies demonstrate the strength of the liquor business in Maine."

Jessica Hall can be contacted at 791-6316 or at:


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