Great Valley School District Proposed Capital Projects Financing - - PowerPoint PPT Presentation

Great Valley School District

Proposed Capital Projects Financing & Debt Prepayment June 2, 2014

Michael C. Lillys Managing Director One Logan Square, 17th floor Philadelphia, PA 19103 Phone: (215) 832-1501 michael.lillys@rbccm.com James Gray Vice President One Logan Square, 17th Floor Philadelphia, PA 19103 Phone: (215) 832-1519 Email: james.gray@rbccm.com

1 RBC Capital Markets, LLC (“RBC CM”) is providing the information contained in this document for discussion purposes only in anticipation of serving as underwriter to the Great Valley School District (the “Issuer”). The primary role of RBC CM, as an underwriter, is to purchase securities, for resale to investors, in an arm’s-length commercial transaction between the Issuer and RBC CM and that RBC CM has financial and other interests that differ from those of the Issuer. RBC CM is not acting as a municipal advisor, financial advisor or fiduciary to Issuer or any other person or entity. The information provided is not intended to be and should not be construed as “advice” within the meaning of Section 15B of the Securities Exchange Act of 1934. The Issuer should consult with its own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate. If the Issuer would like a municipal advisor in this transaction that has legal fiduciary duties to the Issuer, then the Issuer is free to engage a municipal advisor to serve in that capacity.

G-17 Disclosure

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1.4 1.5 1.6 1.7 1.8 1.9 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3 3.1 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Mar-14 May-14

Rates (%)

(1) Reflects market conditions as of 9/05/13 (2) Reflects market conditions as of 11/30/12 (3) Reflects market conditions as of 5/28/14

10YR AAA Rates Municipal Market Data January 1, 2012 - Present

Current = 2.15% (3) 10YR AAA MMD Index as of 5/28/14: 2.15% Low Since 1/1/2012: 1.47% High Since 1/1/2012: 3.04%

• Avg. Since 1/1/2012: 2.07%

Low = 1.47% (2) High = 3.04% (1)

Interest Rate History

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Current Aggregate Debt Service

Period Ending Series of 2006 Series of 2009A Series of 2009B Series of 2010 (QSCB) Series of 2011 (QSCB) Series of 2012 Series of 2013 Aggregate Debt Service 06/30/2015 5,491,368 581,038 589,650 60,463 20,747 1,859,810 808,450 9,411,525 06/30/2016 5,492,618 577,913 593,450 60,463 20,314 1,862,250 816,150 9,423,157 06/30/2017 5,517,618 578,200 571,650 60,463 19,882 1,859,150 833,450 9,440,413 06/30/2018 5,516,818 371,700 60,463 19,450 1,863,900 1,405,150 9,237,481 06/30/2019 788,318 60,463 19,018 1,855,150 1,395,150 4,118,098 06/30/2020 785,318 60,463 18,586 1,858,400 1,402,200 4,124,966 06/30/2021 785,955 60,463 18,153 1,858,000 1,396,000 4,118,571 06/30/2022 60,463 17,721 1,855,400 1,394,400 3,327,984 06/30/2023 60,463 17,289 1,855,400 627,300 2,560,452 06/30/2024 60,463 16,857 1,862,800 1,940,120 06/30/2025 60,463 16,424 707,200 784,087 06/30/2026 60,463 15,992 76,455 06/30/2027 60,463 15,560 76,023 06/30/2028 59,614 15,128 74,742 06/30/2029 14,696 14,696 06/30/2030 14,263 14,263 24,378,010 2,108,850 1,754,750 845,633 280,080 19,297,460 10,078,250 58,743,033 Principal Outstanding: $21,485,000 $1,970,000 $1,655,000 $822,706 $345,778 $15,480,000 $9,040,000 Purpose: CR96,98,&01 CR03 CR03A NM NM AR04,09 CR05;AR09B Call Date: 02/15/2016 08/15/2014 08/15/2014 Anytime Anytime 08/15/2020 02/15/2018 AR: Advance Refunding CR: Current Refunding NM: New Money AGGREGATE DEBT SERVICE (Before State Reimb) Great Valley School District

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Summary of Proposed Transactions

• District will issue $9,995,000 of new debt
• Will fund capital replacements, renovations and improvement to six school buildings and the administrative offices and

technology throughout the District

• 10 year borrowing term
• A bond issue is the most cost-effective method of financing
• By keeping the principal amount at $10 million or less the District will be able to obtain the lowest possible rates (Bank

Qualified) and the shortest possible call provision of 5 years

• Annual debt service payments will be approximately the same as the 2009 A and B Bonds
• Interest rates are very favorable, it’s a good time to issue debt
• District will exercise the “Call Option” (ability to prepay principal) on the 2009 A and B Bonds
• Annual debt service is approx. $1,170,000
• Cost is approx. $3.7 million, which will be funded with available District funds
• 2009 A and B Bonds will be prepaid on the August 15, 2014 call date
• Once these bonds are prepaid, the debt service on the new bond issue will not result in any additional budget impact to

the District

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Bond Issue – Est. Sources & Uses of Funds

Dated Date 07/09/2014 Delivery Date 07/09/2014 Sources: Bond Proceeds: 9,995,000.00 9,995,000.00 Uses: Project Fund Deposits: 9,866,538.75 Delivery Date Expenses: 51,000.00 77,461.25 128,461.25 9,995,000.00 Project Fund Cost of Issuance Underwriter's Discount Sources and Uses of Funds Great Valley School District Series of 2014 (Bond Issue - Current) Par Amount

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Bond Issue – Est. Costs of Issuance

$/1000 Amount 2.20110 22,000 0.25013 4,000 0.35018 2,000 1.25063 12,500 0.15008 1,500 0.40020 4,000 0.50025 5,000 5.10255 51,000 Misc Cost of Issuance Great Valley School District Series of 2014 (Bond Issue - Current)

• Est. Cost of Issuance

Bond Counsel Solicitor DCED/Legal Ads Rating Paying Agent Official Statement

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Bond Issue – Est. Debt Service

Period Ending Principal Coupon Interest Debt Service Annual Debt Service 07/09/2014 11/01/2014 1,070,000 0.300% 41,389.29 1,111,389.29 05/01/2015 64,913.50 64,913.50 06/30/2015 1,176,302.79 11/01/2015 1,040,000 0.450% 64,913.50 1,104,913.50 05/01/2016 62,573.50 62,573.50 06/30/2016 1,167,487.00 11/01/2016 1,040,000 0.590% 62,573.50 1,102,573.50 05/01/2017 59,505.50 59,505.50 06/30/2017 1,162,079.00 11/01/2017 470,000 0.880% 59,505.50 529,505.50 05/01/2018 57,437.50 57,437.50 06/30/2018 586,943.00 11/01/2018 1,050,000 1.170% 57,437.50 1,107,437.50 05/01/2019 51,295.00 51,295.00 06/30/2019 1,158,732.50 11/01/2019 1,065,000 1.460% 51,295.00 1,116,295.00 05/01/2020 43,520.50 43,520.50 06/30/2020 1,159,815.50 11/01/2020 1,080,000 1.720% 43,520.50 1,123,520.50 05/01/2021 34,232.50 34,232.50 06/30/2021 1,157,753.00 11/01/2021 1,095,000 1.970% 34,232.50 1,129,232.50 05/01/2022 23,446.75 23,446.75 06/30/2022 1,152,679.25 11/01/2022 1,115,000 2.170% 23,446.75 1,138,446.75 05/01/2023 11,349.00 11,349.00 06/30/2023 1,149,795.75 11/01/2023 970,000 2.340% 11,349.00 981,349.00 06/30/2024 981,349.00 9,995,000 857,936.79 10,852,936.79 10,852,936.79 Note: MMD +20 +10bps Great Valley School District Series of 2014 (10yr)

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Prepayment Requirements - Series 2009A & B Bonds

Period Ending Interest Principal Redeemed Total 08/15/2014 28,018.75 1,970,000.00 1,998,018.75 28,018.75 1,970,000.00 1,998,018.75 Period Ending Interest Principal Redeemed Total 08/15/2014 24,825.00 1,655,000.00 1,679,825.00 24,825.00 1,655,000.00 1,679,825.00 2009A Bonds 1,998,018.75 2009B Bonds 1,679,825.00 Total 3,677,843.75 Total Refunding Requirements Refunding Requirements Great Valley School District Series of 2014 (CR09B) Refunding Requirements Great Valley School District Series of 2014 (CR09A)

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• Est. New Aggregate Debt Service

(A) (B) (C) (D) (E) (F) [A-B-C+D] [E-A] Period Ending Current Aggregate Debt Less: Series of 2009A Less: Series of 2009B Series of 2014 (10Yrs) New Aggregate Debt Service New Vs. Current Aggregate Debt 06/30/2015 9,411,525 581,038 589,650 1,176,303 9,417,140 5,615 06/30/2016 9,423,157 577,913 593,450 1,167,487 9,419,282

• 3,876

06/30/2017 9,440,413 578,200 571,650 1,162,079 9,452,642 12,229 06/30/2018 9,237,481 371,700 586,943 9,452,724 215,243 06/30/2019 4,118,098 1,158,733 5,276,831 1,158,733 06/30/2020 4,124,966 1,159,816 5,284,782 1,159,816 06/30/2021 4,118,571 1,157,753 5,276,324 1,157,753 06/30/2022 3,327,984 1,152,679 4,480,663 1,152,679 06/30/2023 2,560,452 1,149,796 3,710,248 1,149,796 06/30/2024 1,940,120 981,349 2,921,469 981,349 06/30/2025 784,087 784,087 06/30/2026 76,455 76,455 06/30/2027 76,023 76,023 06/30/2028 74,742 74,742 06/30/2029 14,696 14,696 06/30/2030 14,263 14,263 58,743,033 2,108,850 1,754,750 10,852,937 65,732,370 NEW AGGREGATE DEBT SERVICE (Before State Reimb.) Great Valley School District

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Proposed Financing Timetable

June 2 Board Adoption of Parameters Bond Resolution for capital projects financing Send out Call Notice for 2009 A and B Bonds June 3 Bond Sale – lock-in rates on the bond issue July 9 Bond issue settlement August 15 Prepayment of 2009 A and B Bonds

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Maximum Debt Service

Period Ending Principal Coupon Interest Debt Service Annual Debt Service 07/09/2014 11/01/2014 1,340,000 6.000% 233,333.33 1,573,333.33 05/01/2015 334,800.00 334,800.00 06/30/2015 1,908,133.33 11/01/2015 1,300,000 6.000% 334,800.00 1,634,800.00 05/01/2016 295,800.00 295,800.00 06/30/2016 1,930,600.00 11/01/2016 1,300,000 6.000% 295,800.00 1,595,800.00 05/01/2017 256,800.00 256,800.00 06/30/2017 1,852,600.00 11/01/2017 590,000 6.000% 256,800.00 846,800.00 05/01/2018 239,100.00 239,100.00 06/30/2018 1,085,900.00 11/01/2018 1,315,000 6.000% 239,100.00 1,554,100.00 05/01/2019 199,650.00 199,650.00 06/30/2019 1,753,750.00 11/01/2019 1,330,000 6.000% 199,650.00 1,529,650.00 05/01/2020 159,750.00 159,750.00 06/30/2020 1,689,400.00 11/01/2020 1,350,000 6.000% 159,750.00 1,509,750.00 05/01/2021 119,250.00 119,250.00 06/30/2021 1,629,000.00 11/01/2021 1,370,000 6.000% 119,250.00 1,489,250.00 05/01/2022 78,150.00 78,150.00 06/30/2022 1,567,400.00 11/01/2022 1,390,000 6.000% 78,150.00 1,468,150.00 05/01/2023 36,450.00 36,450.00 06/30/2023 1,504,600.00 11/01/2023 1,215,000 6.000% 36,450.00 1,251,450.00 06/30/2024 1,251,450.00 12,500,000 3,672,833.33 16,172,833.33 16,172,833.33

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Comparison of Maximum Vs. Estimated Principal Maturities

Maximum Est. Amount Payment Date (Nov. 1) Principal Principal Below Maximum 2014 1,340,000 $ 1,070,000 $ 270,000 $ 2015 1,300,000 1,040,000 260,000 2016 1,300,000 1,040,000 260,000 2017 590,000 470,000 120,000 2018 1,315,000 1,050,000 265,000 2019 1,330,000 1,065,000 265,000 2020 1,350,000 1,080,000 270,000 2021 1,370,000 1,095,000 275,000 2022 1,390,000 1,115,000 275,000 2023 1,215,000 970,000 245,000 12,500,000 $ 9,995,000 $ 2,505,000 $

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District’s Moody’s Rating: “Aaa (Stable Outlook)”

• Only seven districts in PA have a “Aaa” rating
• Key rating factors:
• Strong financial position
• History of prudent fiscal management and conservative budgeting
• Strong reserve levels – General Fund Balance and Capital Projects Fund
• Sizable tax base with further growth expected
• Wealth and income factors are well above average
• Manageable amount of debt outstanding which will be paid off rapidly – 95% retired in 10 years

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The foregoing presentation must be read together with the oral presentation that accompanied it. The presentation is a preliminary discussion of a potential transaction and is subject to the following limitations: Sources of Information: This presentation is based on information we received from you and/or public or other sources that we believe are reliable. We have not tried, however, to verify the information independently and so do not guarantee its accuracy or completeness. We have not tried to set forth a complete analysis of every material fact. Projections and Estimates: All statements as to what will or may happen under certain circumstances are based on assumptions, some but not all of which are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results may depend upon events outside of your

• r our control. Changes in assumptions may have a material impact on results. Estimates and projections represent our judgment as of this date and are

subject to change without notice. There can be no assurance that estimated returns and results will not be materially different in the context of an actual transaction over time. Past performance does not necessarily reflect and is not a guarantee of future results. Terms of Hypothetical Transaction: The terms, structures and prices shown in this presentation are indicative only and do not represent an offer to engage in a transaction. Prior to any transaction, (a) we will conduct an internal approval process, and (b) you should satisfy yourselves that you thoroughly understand the transaction and have received all the information you require to make an independent decision. Should you decide to enter into a transaction of the kind presented here, the final terms would be set forth in legal documentation and the terms, pricing and structure would be determined based on prevailing conditions at the time. RBC Capital Markets: RBC Capital Markets is a name of the Royal Bank of Canada and its affiliates, including RBC Capital Markets Corporation in the U.S. (members NYSE – SIPC), RBC Dominion Securities Inc. in Canada (member CIPF), and Royal Bank of Canada (Europe) Ltd. General Disclaimer: RBC Capital Markets disclaims all liability relating to the information contained in this presentation. Opinions expressed in the presentation are current opinions only and subject to change without notice.

Cautionary Statement