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

Peralta Community College District Presentation to the Board of Trustees June 2, 2015 1300 Clay Street, Suite 1000, Oakland, CA 94612 phone 510-839-8200 fax 510-208-8282 A Division of Zions First National Bank

Abbreviated Timeline Pineapple Group approved as oversight manager for Retiree Benefit Trust. Validation filed Lehman Termination and default Asset of Deutsche judgment Management Board Resolution Swaps. B-1 SWAP received. selected as to refund and Financing payments start. Investment restructure 2005 team 2005 bonds Manager. OPEB bonds. selected. restructured. 2005 2006 2007 2008 2009 2010 Swap Sale of the Board Resolution agreements $48,725,000 2005 Auction Rate with on 12/15/05 OBEB Bonds Security market Deutsche approving the sale into fixed rate collapse. of the bonds. AG and bonds, 2/1/09. Morgan $153,749,832.25 Resolution to Stanley. OPEB bonds set up the sold on Retirement 12/19/05, Board. closed 12/28/05. Peralta Community College District | page 1

2005 Bond Structure . Current Interest Bonds $20,015,000.00 2005 Series A Bonds (Standard Bonds) 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 Zero Coupon Bonds Convert to Variable Rate, Non-callable Until Accretion Date $133,734,832.25 (Convertible Auction Rate Securities) (CARS) Price: 100% 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 Peralta Community College District | page 2

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. 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% Peralta Community College District | page 3

2006 Swaps  District entered into six forward starting swaps in 2006 to create a synthetic fixed rate financing. 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 Presentation to the Las Lomitas Elementary School District Board of Trustees | page 4

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. 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 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 Peralta Community College District | page 5

2011 Restructuring  In October 2011, the District refunded and restructured the 2009 bonds to smooth debt service payments. 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 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 Peralta Community College District | page 6

Prior Financing Review 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. Peralta Community College District| page 7

Current Situation  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 Peralta Community College District | page 8

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  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 Peralta Community College District | page 10

Approval of Financing  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 Peralta Community College District | page 11