Peralta Community College District Presentation to the Board of - - PowerPoint PPT Presentation

1300 Clay Street, Suite 1000, Oakland, CA 94612 phone 510-839-8200 fax 510-208-8282

A Division of Zions First National Bank

Peralta Community College District

Presentation to the Board of Trustees

June 2, 2015

Abbreviated Timeline

Peralta Community College District | page 1

2005 2008 2009 2010 2007 2006

Validation filed and default judgment received. Financing team selected. Board Resolution

• n 12/15/05

approving the sale

• f the bonds.

$153,749,832.25 OPEB bonds sold on 12/19/05, closed 12/28/05. Lehman Asset Management selected as Investment Manager. Pineapple Group approved as

• versight manager

for Retiree Benefit Trust. 2005 bonds restructured. Swap agreements with Deutsche AG and Morgan Stanley. Resolution to set up the Retirement Board. Termination

• f Deutsche

Swaps. Board Resolution to refund and restructure 2005 OPEB bonds. Auction Rate Security market collapse. Sale of the $48,725,000 2005 OBEB Bonds into fixed rate bonds, 2/1/09. B-1 SWAP payments start.

2005 Bond Structure

Peralta Community College District | page 2

.

Maturity Principal (August 1) Amount Interest Rate Price 2006 $1,725,000.00 4.71% 100% 2007 3,180,000.00 4.82 100 2008 4,110,000.00 4.87 100 2009 5,340,000.00 4.91 100 2010 5,660,000.00 4.94 100 Current Interest Bonds $20,015,000.00 2005 Series A Bonds (Standard Bonds) Full Accretion Date/Initial Initial Principal Accreted Value Initial Interest Auction Date Series Maturity Date Amount @ Full Value Rate (August 5) 2005 B-1 2015 $27,090,742.00 $33,950,000.00 4.964% 2010 2005 B-2 2020 23,633,292.50 38,450,000.00 5.133 2015 2005 B-3 2025 19,866,112.75 43,175,000.00 5.387 2020 2005 B-4 2031 20,025,603.00 57,525,000.00 5.456 2025 2005 B-5 2039 21,514,328.50 86,650,000.00 5.516 2031 2005 B-6 2049 21,604,753.50 134,475,000.00 5.516 2039 Zero Coupon Bonds Convert to Variable Rate, Non-callable Until Accretion Date $133,734,832.25 (Convertible Auction Rate Securities) (CARS) Price: 100%

2006 Restructuring

• In October 2006, the District purchased from investors the 2006, 2007, and 2008 maturities and

restructured $8.8 million as convertible capital appreciation bond due in 2049. The 2009 and 2010 maturities were left unchanged.

Peralta Community College District | page 3

Original Structure Maturity Principal (August 1) Amount Interest Rate Price 2006 $1,725,000 4.71% 100% 2007 $3,180,000 4.82 100 2008 $4,110,000 4.87 100 2009 $5,340,000 4.91 100 2010 $5,660,000 4.94 100 Amended Structure Maturity Initial Accreted (August 1) Principal Amount Principal Interest Rate 2049 $8,800,000 $10,688,044 6.25%

2006 Swaps

• District entered into six forward starting swaps in 2006 to create a synthetic fixed rate

financing.

Presentation to the Las Lomitas Elementary School District Board of Trustees | page 4 Amortizing Effective Fixed Rate Series National ($MM) Date Maturity (Act/360) B-1 $33.950 8/5/2010 8/5/2015 4.90%

B-2 38.450 8/5/2015 8/5/2020 5.16% B-3 43.175 8/5/2020 8/5/2025 5.28% B-4 57.525 8/5/2025 8/5/2031 5.21% B-5 86.650 8/5/2031 8/5/2039 5.06% B-6 134.475 8/5/2039 8/5/2049 4.94% Total notinal $394.225

2009 Restructuring

• In February 2009, the District structured the B-1 ARS tranche as fixed rate bond. The 2005

current interest rate maturities of 2009 and 2010 were refunded into the 2009 financing.

Peralta Community College District | page 5

Amended Structure Maturity Principal Amount Interest Rate Price (August 1) 2010 $3,660,000 4.415 100 2011 4,785,000 4.870 100 2012 6,120,000 5.400 100 2013 7,720,000 5.773 100 2015 26,440,000 6.423 100 Original Structure Maturity Principal (August 1) Amount Interest Rate Price 2009 $5,340,000 4.91 100 2010 5,660,000 4.94 100 2015 33,590,000 4.964 100

2011 Restructuring

• In October 2011, the District refunded and restructured the 2009 bonds to smooth debt

service payments.

Peralta Community College District | page 6

Amended Structure Maturity (Aug1) Principal Amount Interest Rate Price 2013 1,595,000 3.47% 100 2014 2,590,000 3.979 100 2016 2,265,000 4.465 100 2017 1,095,000 5.330 100 2018 1,270,000 5.680 100 2019 1,695,000 5.959 100 2020 2,465,000 6.159 100 2021 1,570,000 6.309 100 2022 2,120,000 6.509 100 2023 2,400,000 6.709 100 2024 2,965,000 6.809 100 2025 4,005,000 6.909 100 2026 2,825,000 6.659 100 2027 24,645,000 7.309 100 Original Structure Maturity (Aug 1) Principal Amount Interest Rate Price 2010 $3,660,000 4.415 100 2011 4,785,000 4.870 100 2012 6,120,000 5.400 100 2013 7,720,000 5.773 100 2015 26,440,000 6.423 100

Prior Financing Review

Peralta Community College District| page 7

• December 2005

Issued $153.7 million in Bonds, including convertible CABs to fund $150 million of Retiree Health Benefit Costs.

• October 2006

Through an exchange and modification of bonds, $8.8 million of bonds originally maturing in 2006-08 were extended through 2049.

• November 2006

Entered into six fixed rate forward starting interest rate swaps (receiving LIBOR & paying fixed rate)

• February 2009

Restructured remaining 2005 fixed-rate bonds maturing in 2009-10 and B-1 Tranche of ARS into fixed-rate bonds maturing from 2010-15.

• October 2011

Restructured February 2009 transaction, maturities from 2011-15 to mature from 2013-31.

Current Situation

Peralta Community College District | page 8

• The District’s B-2 Tranche if fully accreted at $38,450.00 on August 5, 2015
• B-2 Tranche would automatically covert into Auction Rate Securities (ARS)
• ARS market remains dormant with high interest rates
• Investors of B-2 Tranche would receive the default rate of 17% of converted to ARS
• Indenture requires several steps to convert B-2 into variable rate bond.
• B-2 Interest rate swap starts August 5, 2015
• In the current market, the District would pay a fixed rate of 5.158% and receive

LIBOR (currently about 0.20%) from Morgan Stanley

Options

• Convert ARS to Fixed rate bonds
• Twenty year maturity
• Current interest Bonds
• Callable in 10 years
• With or without swap
• Termination is approximately equal to five week payments over 5 years
• Convert ARS to Variable Rate Bonds with 5 year maturity
• With credit enhancement Letter of Credit
• Highest credit rating
• Callable
• With out credit enhancement
• No rating
• Private Placement

Presentation to the Las Lomitas Elementary School District Board of Trustees | page 9

Plan of Finance

Peralta Community College District | page 10

• Convert B-2 tranche of ARS into variable rate bonds
• Variable rate bonds (VRDOs) are an alternative for the ARS
• VRDOs require credit enhancement and a broker-dealer to reset the interest rates on

the bonds on a weekly basis

• Callable on a weekly basis and will provide flexibility for the District to redeem or

restructure bonds if needed

• Swap in place to mitigate some interest rate expense

Approval of Financing

Peralta Community College District | page 11

• The District is approving a resolution that authorizes the process to convert ARS into a

variable rate bond

• The District is also approving:
• Form of the Reimbursement Agreement with Barclays Bank plc
• Supplemental Indenture to allow the financing mechanics to accomplish this

financing

• Going forward, the District will approve an offering disclosure document (Official

Statemetn) as well as a remarketing agent agreement at a future meeting