Update on Debt Issuance for Approved Capital Projects UM

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Scot Richardson
5 years ago
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1 Update on Debt Issuance for Approved Capital Projects UM Planning is underway for the next issuance of System Facilities Revenue Bonds. Debt financing previously approved by the Board of Curators but not yet issued totals approximately $256 million. Based on our latest analysis, we will likely issue the remaining debt in two phases. The first phase should occur sometime this fall, with Bank of America Merrill Lynch (BAML) serving as the lead underwriter. The final phase of issuance should follow sometime in mid-to-late These plans are subject to change and will ultimately be driven by project cash flow needs and the continuously evolving market interest rate environment. To the extent necessary, interim construction financing will be provided by the University s commercial paper program. Our core finance team (Prager & Co., financial advisor; Thompson Coburn, bond counsel; Gilmore & Bell, disclosure counsel) is currently working with BAML on bond issuance documents for the next phase and will be ready for issuance as early as late October. Once plans are finalized, it is likely that a special Board meeting will be needed to approve bond documents prior to issuance. OPEN FIN INFO 3-1

2 University of Missouri System Board of Curators October 2-3, 2014 FINANCE COMMITTEE Update on Debt Issuance for Approved Capital Projects UM OPEN FIN INFO 3-2

3 The Team Financial Advisor Bond Counsel Disclosure Counsel OPEN FIN INFO 3-3

4 The Team These three firms represent the University s underwriting team, having been selected in 2013 through a competitive process. OPEN FIN INFO 3-4

5 Board Approved Capital Projects Debt Financing - Approved But Not Yet Issued (in $ thousands) Project Name Purpose Total * UMC Wolpers and Johnston Housing $ 18,396 UMC Virginia Avenue South Housing 14,507 UMC Laws/Lathrop/Jones Housing 54,125 UMC Chilled Water Plant Campus Utilities 12,539 UMC Patient Centered Care Center Classroom & Research 30,500 UMC Memorial Stadium East Athletics 6,736 UMC Other Athletic Projects Athletics 5,500 MUHC MOI Expansion MU Health Care 30,000 UMSL Optometry Building Classroom & Research 12,000 UMSL Wellness Center Recreational Facilities 20,917 UMSL Science Learning Building Classroom & Research 20,771 MO S&T Residential Housing Housing 30,000 Debt Financing Approved, Not Yet Issued $ 255,991 Represents remaining amount to be financed for each project. Initial financing was provided by the $150 million debt issuance last fall. OPEN FIN INFO 3-5

6 The Plan Remaining debt could be issued in two additional phases Fall 2014 Summer 2015 Debt could be a mix of fixed and variable, taxexempt and taxable. Interim financing, as needed, will continue to be provided by the University s commercial paper program. OPEN FIN INFO 3-6

7 The Plan Bank of America Merrill Lynch will serve as the lead underwriter on the next phase, likely this fall. Our team is currently working on required bond documents and could be ready to issue by mid-to-late October (the KPMG external audit would be complete). S&P / Moody s reviews will be initiated shortly Market conditions will ultimately determine the timing of when we go to market for phase one. Depending upon timing, a special Board meeting could be necessary to approve bond documents. OPEN FIN INFO 3-7

8 The University s Borrowing Curve 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% /31/ /12/ Series 2013 Pricing Date 5/13/ Series 2014 Pricing Date 8/31/2014 Data provided by Prager & Co., LLC. Rates based on University of Missouri specific spreads over the Municipal Market Data curve. OPEN FIN INFO 3-8

9 Questions? OPEN FIN INFO 3-9

Review Fiscal Year 2018 Operating Budget Planning UM. The Board s touchpoints in this process are detailed below:

Review Fiscal Year 2018 Operating Budget Planning UM A budget update discussing FY17 budget execution including withholds and FY18 budget development was presented to the Board as an information item at