LTC 278-2003
CITY OF MIAMI BEACH
Office of the City Manager
Letter to Co"mmission No. 21f?~?L5703
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To:
From:
Mayor David Dermer and Date: December 2, 2003
Members of the City Commission
Jorge M. GOnZalez' __/
City Manager (j~ ()
MOUNT SINAI MEDICAL CENTER. NOTICE OF EVENTS OF DEFAULT
Subject:
On November 18, 2003 the Health Facilities Authority (HFA) heard a discussion
regarding the proposed refunding and restructuring of the Mount Sinai Medical Center
of Florida, Inc. (MSMC) outstanding Series 2001 Band 2001 C Revenue Bonds. The
HFA, at this meeting, scheduled a December 3, 2003 public hearing to consider the Mt.
Sinai bonds for approval.
Subsequent to the November 18, 2003 meeting, the HFA and City of Miami Beach
Administration have been notified by MSMC that they are in receipt of a Notice of
Events Default from SunTrust Bank. SunTrust Bank is the registered trustee for the
MSMC Series 1998 and Series 2001 Bonds, MSMC and their counsel have stated that
it is their position that the technical defaults noted in the Notice of Events of Default do
not and did not exist.
The trustee claims that the following three defaults of the Master Trust Indenture (MTI)
with the MSMC Revenue Bonds have occurred:
· Revenues were required by the MTI to be not less than the amount required in
cash to pay the total operating expenses of MSMC and to pay the debt service
on all indebtedness for the fiscal year (FY) ended December 31, 2002.
According to MSMC's independent auditors, Deloitte & Touch, the revenues of
MSMC did not meet this requirement.
· MSMC has not delivered, as required by the MTI, a certificate from their
consultant, Cap Gemini Ernst & Young, stating that MSMC has followed their
consultant's recommendations.
· MSMC has not delivered, as required by the MTI, a report of a n independent
certified public accountant (CPA) stating whether any member of MSMC is in
default in the performance of any covenant contained in the MTI. MSMC has
submitted a report from an independent CPA firm, but said report does not
contain a definitive statement of compliance with the above requirement.
MSMC has advised that the event that formed the basis of the claimed technical
defaults did not exist, and further that their counsel and accountants are working
together to resolve this matter. Additionally, MSMC has clarified that the claimed
defaults are not based on the Medical Center's current financial condition or because of
any missed payments,
Mr. Alex Mendez, Senior Vice President and Chief Financial Officer of MSMC, has
stated that MSMC auditors have agreed to restate the Medical Center's FY 2002
financial statements and have sent a draft copy to the trustee, Further, Mr. Mendez has
stated that he expects the trustee to withdraw the default notice as a result of the
restatement of the coverage test by the auditors.
The HFA public hearing will be held December 3, 2003 at 4:00 P.M. in my conference
room. The Administration will be forwarding to you any updates 0 r notices received
pertaining to this matter.
If you should have any questions or need any additional information, please feel free to
contact me or Trish Walker at extension 7574.
Electronic Copy: Management Team
JMG\PDW\mim
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