OFFICIAL STATEMENT DATED OCTOBER 25, 2010 NEW ISSUE BOOK-ENTRY ONLY Rating: 2010 Series A Bonds (Standard & Poor s): A 2010 Series B Bonds: Not Rated (See RATING herein) In the opinion of Bond Counsel, under existing laws, regulations, rulings and court decisions, (i) interest on the 2010 Series A Bonds is not excluded from gross income for federal income tax purposes, (ii) interest on the 2010 Series B Bonds is excluded from gross income for federal income tax purposes, subject to the condition that the Issuer and the Borrower comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must have been or must be satisfied prior to or subsequent to the issuance of the 2010 Series B Bonds, except that no opinion is expressed as to the exclusion from gross income for federal income tax purposes of interest on any 2010 Series B Bond for any period during which such Bond is held by a person who within the meaning of Section 147(a) of the Code, is a substantial user of any facilities financed with the proceeds of the 2010 Series B Bonds or a related person, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and (ii) interest on the 2010 Series A Bonds and the 2010 Series B Bonds is exempt from present Arkansas income taxes. See TAXATION herein. $11,000,000 CITY OF JONESBORO, ARKANSAS TAXABLE ECONOMIC DEVELOPMENT REVENUE BONDS (ADFA/AEDC GUARANTY PROGRAM) (NORDEX USA, INC. PROJECT) 2010 SERIES A Dated: Date of delivery $9,000,000 CITY OF JONESBORO, ARKANSAS TAX-EXEMPT RECOVERY ZONE FACILITY REVENUE BONDS (NORDEX USA, INC. PROJECT) 2010 SERIES B Due: October 1, as shown on inside cover The 2010 Series A Bonds and the 2010 Series B Bonds (collectively, the Bonds ) are issued by and are special obligations of the City of Jonesboro, Arkansas (the Issuer ), secured on a parity basis by the Issuer s pledge of all amounts realized by the Issuer under the Lease Agreement (the Lease Agreement ) to be entered into by the Issuer with Nordex USA, Inc., a Delaware corporation (the Borrower ). See THE BONDS Security herein. The Bonds are payable (except to the extent paid out of money attributable to Bond proceeds, insurance proceeds or otherwise as described herein) from amounts realized by the Issuer under the Lease Agreement. The payment of the principal of and interest on $6,000,000 of the 2010 Series A Bonds (the 2010 Series A ADFA Guaranteed Bonds ) is guaranteed (to the extent set forth herein) by the Arkansas Development Finance Authority pursuant to the ADFA Guaranty, as described herein. The payment of the principal of and interest on the $5,000,000 aggregate principal amount of the 2010 Series A Bonds (the 2010 Series A AEDC Guaranteed Bonds ), is guaranteed (to the extent set forth herein) by the Arkansas Economic Development Commission pursuant to the AEDC Guaranty, as described herein. The 2010 Series B Bonds are NOT guaranteed in any way by the ADFA Guaranty or the AEDC Guaranty, and are payable solely from the amounts realized by the Issuer under the Lease Agreement relating to the Project financed with the proceeds of the Bonds. See THE BONDS Security herein. THE BONDS DO NOT CONSTITUTE A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF ARKANSAS OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF. The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the Bonds. Purchases will be made in book-entry form through DTC Participants and no physical delivery of the Bonds will be made to purchasers of the Bonds, except as described herein. Payment of principal and interest will be made to purchasers by DTC through its participants. The Bonds are issuable in book-entry form only in the denomination of $5,000 or any integral multiple thereof, interchangeable as more fully described herein. Semiannual interest (payable April 1, 2011, and each April 1 and October 1 thereafter) on the Bonds shall be paid by check or draft by Bank of the Ozarks, Little Rock, Arkansas (the Trustee ), to the registered owners of the Bonds as of the record date for such payment as shown on the bond registration books of the Issuer maintained by the Trustee. Principal of the Bonds is payable at the principal corporate trust office of the Trustee. The Bonds will be subject to redemption prior to maturity as set forth herein. The Bonds will mature on October 1 of the years set forth in the maturity schedules on the inside front cover of this Preliminary Official Statement. The Bonds are offered when, as and if issued and received by the Underwriter and subject to the approval of legality by Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Bond Counsel, Little Rock, Arkansas, and certain other conditions. Certain matters will be passed upon for the Underwriter by its counsel Jack Nelson Jones Jiles & Gregory, P.A., Little Rock, Arkansas. It is expected that the Bonds in definitive form will be available for delivery through the facilities of DTC on or about October 27, 2010, in New York, New York.
MATURITY (October 1) MATURITY SCHEDULE $11,000,000 Base CUSIP 1 480258 CITY OF JONESBORO, ARKANSAS TAXABLE ECONOMIC DEVELOPMENT REVENUE BONDS (ADFA/AEDC GUARANTY PROGRAM) (NORDEX USA, INC. PROJECT) 2010 SERIES A PRINCIPAL AMOUNT ($) INTEREST RATE YIELD CUSIP EXTENSION 2011 635,000 1.000% 1.000% AA0 2012 615,000 1.400% 1.400% AB8 2013 625,000 1.850% 1.850% AC6 2014 635,000 2.200% 2.200% AD4 2015 650,000 2.400% 2.400% AE2 2016 665,000 2.800% 2.800% AF9 2017 685,000 3.000% 3.250% AG7 2018 705,000 3.375% 3.550% AH5 2019 725,000 3.850% 3.850% AJ1 2020 755,000 4.000% 4.000% AK8 2021 785,000 4.000% 4.200% AL6 2025 945,000 4.750% 4.950% AM4 $2,575,000 5.000% Term Bond due October 1, 2024 at Price 103.975% Yield 4.100%* *Priced to October 1, 2015 at 100% call. MATURITY (October 1) $9,000,000 Base CUSIP 1 480260 CITY OF JONESBORO, ARKANSAS TAX-EXEMPT RECOVERY ZONE FACILITY REVENUE BONDS (NORDEX USA, INC. PROJECT) 2010 SERIES B PRINCIPAL AMOUNT ($) INTEREST RATE YIELD CUSIP EXTENSION 2016 250,000 4.000% 4.000% AA6 2017 350,000 4.250% 4.250% AB4 2018 400,000 4.500% 4.500% AC2 2019 500,000 4.600% 4.600% AD0 2020 1,000,000 4.750% 4.750% AE8 2021 1,100,000 4.900% 4.900% AF5 2022 1,200,000 5.000% 5.000% AG3 2023 1,300,000 5.100% 5.100% AH1 2024 1,400,000 5.150% 5.150% AJ7 2025 1,500,000 5.200% 5.200% AK4 1 The CUSIP numbers shown above have been assigned by an organization not affiliated with the Issuer. The Issuer was not responsible for the selection of CUSIP numbers, and makes no representation as to the accuracy of such numbers on the Bonds or as indicated herein.
This Preliminary Official Statement does not constitute an offer to sell the Bonds in any jurisdiction to any person to whom it is unlawful to make such an offer. No dealer, salesman or any other person has been authorized to give any information other than that contained in this Preliminary Official Statement or to make any representations and, if given or made, such other information or representations must not be relied upon as having been authorized by the City of Jonesboro, Arkansas, the Underwriter, or any other person. The information and expression of opinion herein are subject to change without notice, and neither the delivery of this Preliminary Official Statement nor any sale made hereunder shall, under any circumstances, create an implication that there has been no change in the affairs of the Issuer, or in other matters described in the Preliminary Official Statement, since the date hereof. Certain information contained in this Preliminary Official Statement has been obtained from the Issuer, the Borrower and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness and nothing in this Preliminary Official Statement is to be construed as a representation by the Underwriter. By its purchase of the Bonds, an investor is acknowledging that it has reviewed all the information it deems necessary to make an informed decision, and that it is not relying on any representation of the Underwriter or any of its officers, representatives, agents, or directors in reaching its decision to purchase the Bonds. The investor, by its purchase of the Bonds, acknowledges its consent for the Underwriter to rely upon the investor s understanding of and agreement to the preceding two paragraphs as such relates to the disclosure and fair dealing obligations that may be applicable to the Underwriter under applicable securities laws and regulations. THIS OFFICIAL STATEMENT CONTAINS CERTAIN PROJECTIONS AND ESTIMATES, AS WELL AS ASSUMPTIONS MADE BY THE ISSUER BASED UPON INFORMATION CURRENTLY AVAILABLE TO THE ISSUER. WHEN USED IN THIS OFFICIAL STATEMENT, THE WORDS "ANTICIPATE," "ESTIMATE," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY PROJECTIONS AND ESTIMATES. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR EXPECTED.
TABLE OF CONTENTS Page INTRODUCTORY STATEMENT...1 THE ISSUER...5 THE BONDS...5 THE GUARANTIES...11 SOURCES AND USES OF FUNDS...16 THE PROJECT...17 THE LEASE AGREEMENT...19 THE INDENTURE...24 TAXATION...30 RATING...32 UNDERWRITER...32 SECONDARY MARKET DISCLOSURE...32 LEGAL MATTERS...33 LITIGATION...33 ENFORCEABILITY OF REMEDIES...33 MISCELLANEOUS...33 Appendix A Description of the Borrower, including Nordex Group Report on First Half of 2010 No registration statement relating to the Bonds has been filed with the Securities and Exchange Commission. The Bonds have not been approved or disapproved by the Securities and Exchange Commission nor has the Securities and Exchange Commission passed upon the accuracy or adequacy of this Preliminary Official Statement.
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PRELIMINARY OFFICIAL STATEMENT $11,000,000 CITY OF JONESBORO, ARKANSAS TAXABLE ECONOMIC DEVELOPMENT REVENUE BONDS (ADFA/AEDC GUARANTY PROGRAM) (NORDEX USA, INC. PROJECT) 2010 SERIES A $9,000,000 CITY OF JONESBORO, ARKANSAS TAX-EXEMPT RECOVERY ZONE FACILITY REVENUE BONDS (NORDEX USA, INC. PROJECT) 2010 SERIES B INTRODUCTORY STATEMENT This Preliminary Official Statement contains brief descriptions of the Issuer, the Bonds, the ADFA Guaranty, the AEDC Guaranty, the Lease Agreement, and the Indenture. The descriptions and summaries herein do not purport to be comprehensive or definitive and reference is made to each document for the complete details of all terms and conditions. Terms not defined herein shall have the meanings set forth in the respective documents. All statements herein are qualified in their entirety by reference to each document. (See MISCELLANEOUS herein for information regarding availability of the documents.) The purpose of this Preliminary Official Statement is to furnish certain information in connection with the sale by the City of Jonesboro, Arkansas (the Issuer ) of its $11,000,000 Taxable Economic Development Revenue Bonds, (ADFA/AEDC Guaranty Program), (Nordex USA, Inc. Project), 2010 Series A (the 2010 Series A Bonds ), and its $9,000,000 Tax-Exempt Recovery Zone Facility Revenue Bonds, (Nordex USA, Inc. Project), 2010 Series B (the 2010 Series B Bonds, and collectively with the 2010 Series A Bonds, the Bonds ). The 2010 Series A Bonds will be issued pursuant to a Trust Indenture (the 2010 Series A Indenture ), dated October 27, 2010, between the Issuer and Bank of the Ozarks, a banking corporation organized under the laws of the State of Arkansas, as trustee (together with any successors and assigns and any surviving, resulting or transferee entity, the Trustee ). The 2010 Series B Bonds will be issued pursuant to a separate Trust Indenture (the 2010 Series B Indenture, and collectively with the 2010 Series A Indenture, the Indentures ), dated October 27, 2010, between the Issuer and the Trustee, as trustee. The Bonds are being issued by the Issuer to finance the costs of acquiring, constructing and equipping an industrial facility for the manufacture of wind turbine nacelles to be located in the Issuer s jurisdiction and related equipment (the Project ). The Issuer will enter into a Lease Agreement dated as of October 27, 2010 (the Lease Agreement ) with Nordex USA, Inc., a Delaware corporation (the Borrower ), pursuant to which the Project will be leased to the Borrower by the Issuer. The Bonds are special obligations of the Issuer payable solely from payments under the Lease Agreement (except to the extent paid out of moneys attributable to Bond proceeds, investment income, or (solely with respect to the 2010 Series A Bonds) the ADFA Guaranty or AEDC Guaranty (both as defined and described herein)), do not constitute a debt or pledge of the faith and credit, within the meaning of any constitutional or statutory limitation, of the Issuer, the State of Arkansas or any political subdivision or agency thereof, and no bondholder will ever have the right to compel any exercise of taxing power by the Issuer to pay the Bonds. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, particularly Title 14, Chapter 164, Subchapter 2 of the Arkansas Code of 1987 Annotated, as amended (the Act ), and pursuant to an ordinance of the City Council of
the Issuer approving and authorizing the Bonds and the execution and delivery of the Lease Agreement and the Indenture (the Ordinance ). The proceeds to be received by the Issuer from the sale of the 2010 Series A Bonds will be loaned to or expended on behalf of the Borrower to: (i) finance a portion of the costs of acquiring, constructing and equipping an industrial facility for the manufacture of wind turbine nacelles to be located at 3100 Nordex Drive, Jonesboro, Arkansas 72401 (the 2010 Series A Project ), to be owned by the Issuer and leased to the Borrower, (ii) pay bond guaranty fees associated with the ADFA Guaranty and the AEDC Guaranty, (iii) establish a reserve fund with respect to the 2010 Series A Bonds, and (iv) pay a portion of the expenses incurred in connection with the issuance of the 2010 Series A Bonds. The proceeds to be received by the Issuer from the sale of the 2010 Series B Bonds will be loaned to or expended on behalf of the Borrower to: (i) finance a portion of the costs of acquiring and installing equipment for the manufacture of wind turbine nacelles in connection with the 2010 Series A Project (the 2010 Series B Project, and together with the 2010 Series A Project, the Project ), to be owned by the Issuer and leased to the Borrower, (ii) establish a reserve fund with respect to the 2010 Series B Bonds, and (iii) pay a portion of the expenses incurred in connection with the issuance of the 2010 Series B Bonds. Pursuant to a Lease and Agreement between the Issuer and the Borrower (the Lease Agreement ), the Borrower will agree to make rent payments sufficient to pay when due the principal of and premium, if any, and interest on the Bonds. Mortgage Pursuant to a mortgage (including a security agreement, assignment of rents and leases, and assignment of future advances) (the Mortgage ) between the Issuer and the Trustee, the Issuer will grant to the Trustee a mortgage on and a security interest in the Issuer s interest in the Project which is composed of both real and personal property (collectively, the Mortgaged Property ). The mortgage and security interest in the Mortgaged Property will secure both the 2010 Series A Bonds and the 2010 Series B Bonds on a parity basis. Corporate Guaranty Payment of the principal of and interest on the 2010 Series B Bonds is unconditionally guaranteed by the Borrower and by the Borrower s parent company, Nordex SE, pursuant to a Guaranty Agreement dated as of October 27, 2010 (the Guaranty ). See THE BONDS Security The Corporate Guaranty, herein. The 2010 Series A Bonds and the ADFA Guaranty and the AEDC Guaranty The 2010 Series B Bonds are NOT guaranteed in any way by the ADFA Guaranty or the AEDC Guaranty, and are payable solely from the amounts realized by the Issuer under the Lease Agreement relating to the Project financed with the proceeds of the Bonds. The ADFA Guaranty and the AEDC Guaranty apply only to the 2010 Series A Bonds. Payment of debt service (principal and interest only) sufficient to amortize the indebtedness of a portion of the 2010 Series A Bonds, in an aggregate principal amount of $6,000,000 (the 2010 Series A ADFA Guaranteed Bonds ), will be guaranteed (to the extent described herein and as further described under the heading THE GUARANTIES - The ADFA Guaranty ) by the Arkansas Development Finance Authority (the Authority ) pursuant to Act 2
No. 505 of the Acts of Arkansas of 1985, as amended ( Act 505 ), pursuant to a guaranty agreement from the Authority to the Trustee (the ADFA Guaranty ). The obligations of the Authority as guarantor are limited to available moneys in the Revenue Bond Guaranty Reserve Account (the ADFA Guaranty Reserve Account ) created and being maintained pursuant to the authority conferred in Act 505. As of June 30, 2010, there were funds on deposit in the ADFA Guaranty Reserve Account totaling $17,501,627. Upon the issuance of the 2010 Series A ADFA Guaranteed Bonds, the Authority will have approximately $98,202,992 in outstanding bond and loan guarantees (principal amount). The Authority is required to issue its own bonds in sufficient amounts to ensure that there will be available at all times in the ADFA Guaranty Reserve Account the necessary funds as required by Act 505. Bonds issued by the Authority to fund its guaranty obligations are secured by earnings derived by the State Board of Finance from investments of the State of Arkansas (the State ) daily Treasury balance. For additional information concerning the limited obligations of the Authority with respect to the ADFA Guaranty and security for guaranty bonds, see THE GUARANTIES - The ADFA Guaranty herein. Payment of debt service (principal and interest only) sufficient to amortize the indebtedness of a portion of the 2010 Series A Bonds in an aggregate principal amount of $5,000,000 (the 2010 Series A AEDC Guaranteed Bonds ), will be guaranteed (to the extent described under THE GUARANTIES - The AEDC Guaranty herein) by the Arkansas Economic Development Commission (the Commission ) pursuant to Act No. 173 of the Acts of Arkansas of 1967, as amended ( Act 173 ), pursuant to a guaranty agreement from the Arkansas Economic Development Commission (the Commission ) to the Trustee (the AEDC Guaranty ). The obligations of the Commission as guarantor are limited to available moneys in the Revenue Bond Guaranty Reserve Account (the AEDC Guaranty Reserve Account ) created and being maintained pursuant to the authority conferred in Act 173. As of June 30, 2010, there were funds on deposit in the AEDC Guaranty Reserve Account totaling $16,892,308. Upon the issuance of the 2010 Series A AEDC Guaranteed Bonds, the Commission will have approximately $58,671,520 in outstanding bond guarantees (principal amount). The Commission is required to issue its own bonds in sufficient amounts to ensure that there will be available at all times in the AEDC Guaranty Reserve Account the necessary funds as required by Act 173. Bonds issued by the Commission to fund its guaranty obligations are secured by earnings derived by the State Board of Finance from investments of the State daily Treasury balance. For additional information concerning the limited obligations of the Commission with respect to the AEDC Guaranty and security for guaranty bonds, see THE AEDC GUARANTY herein. The Authority has guaranteed and there remain outstanding the following Economic Development Revenue Bonds, bond anticipation notes and State Agencies Facilities Bonds (the Previous Issues ) to finance industrial development and governmental activities in the State: 3
Name Dated Date Issued Outstanding As of 6/30/10 1996 Tax-Exempt - Series G through J 10/1/1996 7,250,000 135,000 1997 Tax-Exempt - Series G through H 11/1/1997 3,020,000 45,000 1999 Tax-Exempt - Series A through E 4/1/1999 6,045,000 295,000 1999 Tax-Exempt - Series H Pool 8/1/1999 6,985,000 1,115,000 2000 Tax-Exempt - Series A Pool 11/1/2000 5,795,000 65,000 2000 Series B Tax-Exempt & Series C Taxable 12/1/2000 5,180,000 3,300,000 2000 State Agencies Facilities Series A Livestock 7/1/2000 1,280,000 285,000 & Poultry 2001 Taxable Series C C. Bean Transport 10/4/2001 6,500,000 4,837,369 2001 Tax Exempt Series A and C 11/1/2001 2,625,000 1,475,000 2002 Series A 5/1/2002 4,752,500 2,202,500 2003 A & B AgriTecSorbents 1/1/2003 2,130,000 1,290,000 2003 Taxable Series C & Tax-Exempt Series D 6/1/2003 6,505,000 3,560,000 2003 City of Hot Springs Magic Springs 9/1/2003 5,265,000 4,000,000 2003 Venture Capital Program* 12/31/2003 10,000,000 10,000,000 2004 Series A 9/1/2004 6,940,000 5,100,000 2005 City of Hot Springs Magic Springs 4/1/2005 4,100,000 3,075,000 2005 Interim Loan Safe Foods 5/11/2005 4,000,000 3,338,732 2005 Series A 8/16/2005 9,840,000 5,377,500 2005 Interim Loan - America s Choice Products 10/25/2005 2,560,000 147,013 2006 A & B Drew Co - J.P. Price Lumber Company 2/1/2006 5,000,000 3,575,000 2006 Series A 7/1/2006 4,400,000 3,750,000 2007 Series A & B 3/20/2007 4,800,000 3,632,500 2007 City of Little Rock (Welspun) Series A 8/1/2007 6,000,000 5,664,546 2008 City of Little Rock (Sage V) Series A 11/7/2008 4,455,000 4,455,000 2008 Series A & C 12/17/2008 5,260,000 5,015,000 2008 City of Little Rock (Sage V) Series A-1 12/18/2008 1,545,000 1,545,000 2009 Interim Loan America s Choice Products 3/18/2009 50,000 50,000 2009 Series A & B Methodist Family 4/1/2009 4,955,000 4,855,000 2009 Interim Loan C Bean Transport, Inc. 12/10/2009 500,000 500,000 2010 City of Hope Amerities 4/14/2010 6,000,000 6,000,000 2010 Series A & B 4/28/2010 6,737,500 6,307,500 TOTAL: $150,475,000 $94,992,660 *Maximum amount authorized to be guaranteed under the Venture Capital Program The previous issues and other Economic Development Revenue Bonds that are no longer outstanding were used to finance 162 industrial projects located in Arkansas for 130 separate borrowers. In addition, after the date of issuance of the Bonds, the Authority expects to issue additional bonds for additional facilities under its ADFA Guaranty Program, which is the program under which the 2010 Series A ADFA Guaranteed Bonds are guaranteed by the Authority. The bonds of previously issued bonds are, and any additional bonds will be, separately secured, and the pledges of mortgaged property, if any, securing such bonds do not and will not secure the 2010 Series A Bonds. However, the bonds previously issued under the ADFA Guaranty Program are guaranteed by the Authority from moneys in the ADFA Guaranty Reserve Account, and the Authority anticipates that additional bonds, if any, will also be guaranteed pari passu by the Authority from the ADFA Guaranty Reserve Account. The Authority, the Commission, the Borrower and the Borrower s parent company, Nordex SE, have entered into a Guaranty Agreement for Reimbursement of Advanced Funds 4
(the Guaranty Agreement ). The Guaranty Agreement contains certain financial and other representations, warranties, and covenants, the breach of which may, at the option of either the Authority or the Commission, result in the occurrence of an Event of Default under the Lease Agreement (see THE LEASE AGREEMENT Events of Default and Remedies ). The 2010 Series B Bonds and Recovery Zone Facility Bonds Designation Pursuant to Section 1400U-1 through 1400U-3 of the Internal Revenue Code of 1986, as amended (the Code ), including the provisions of the American Recovery and Reinvestment Act of 2009 ( ARRA ), states and local governments, such as the Issuer, are authorized to issue recovery zone facility bonds to finance certain recovery zone property for use within designated recovery zones, in amounts not in excess of certain volume caps allocated among states and counties and large municipalities within the states based on relative declines in employment in 2008. The Authority, pursuant to Executive Order ED 09-13, October 13, 2009, and the Issuer, pursuant to the Ordinance, has designated the Jonesboro Work Force Recovery Zone as a recovery zone for purposes of the Code. The Jonesboro Work Force Recovery Zone is composed of the counties of Clay, Craighead, Crittenden, Cross, Greene, Jackson, Lawrence, Mississippi, Poinsett, Randolph and Sharp, in the State of Arkansas. The Issuer, on behalf of the Jonesboro Work Force Recovery Zone, has received an allocation of authority under ARRA and the applicable regulations promulgated by the Department of Treasury to issue recovery zone facility bonds in the principal amount of $9,000,000. The 2010 Series B Project to be financed with the proceeds of the 2010 Series B Bonds is located in the Jonesboro Work Force Recovery Zone. The Issuer and the Borrower have both covenanted that 95 percent or more of the net proceeds of the 2010 Series B Bonds will be used for recovery zone property as defined in IRC Section 1400U-3(c)(1). The 2010 Series C Bonds Simultaneously with the issuance of the Bonds, the Issuer will also issue its Taxable Economic Development Revenue Bonds (Nordex USA, Inc. Project) 2010 Series C (the 2010 Series C Bonds ). The 2010 Series C Bonds will be issued under a separate indenture from the Indentures and will be secured by and payable solely from the amounts realized by the Issuer under the Lease Agreement, on a subordinate basis with respect to the Bonds. It is anticipated that the 2010 Series C Bonds will be issued in the approximate principal amount of $25,000,000 and the proceeds of the 2010 Series C Bonds will be loaned by the Issuer to the Borrower for application by the Borrower toward costs of the Project. The 2010 Series C Bonds will be privately placed with an affiliate of the Borrower. THE ISSUER The Issuer is a duly created and existing political subdivision of the State of Arkansas (a city of the first class) under the Constitution and laws of the State of Arkansas. The Issuer is authorized and empowered under the provisions of the Act to issue revenue bonds for the financing of lands, buildings or facilities which can be used in securing or developing industry. THE BONDS General. The Bonds will be dated the date of delivery, and bear interest from such date, payable semiannually on April 1 and October 1 of each year, commencing April 1, 2011, at the rates set forth on the inside front cover page hereof. The Bonds mature on October 1 in the years and in the principal amounts set forth on the inside front cover page hereof. Each Bond 5
shall be dated as of the date on which it is authenticated or if it is authenticated prior to a date on which interest is paid, it shall be dated October 1, 2010. The Bonds will be registered with DTC (as defined below) in the denomination of $5,000 each or any integral multiple thereof interchangeable in accordance with the provisions of the Indenture. In the event any Bond is mutilated, lost or destroyed, the Issuer may execute and the Trustee may authenticate a new Bond in accordance with the provisions therefor in the Indenture. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding business day not a Saturday or Sunday or a legal holiday or a day which banking institutions are authorized by law to close with the same force and effect as if made on the date of maturity or the dated fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Book-Entry Only System. The Bonds will be issued only as one fully registered Bond for each maturity, in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ), as registered owner of all the Bonds. The fully registered Bonds will be retained and immobilized in the custody of the Trustee. DTC (or any successor securities depository) or its nominee for all purposes under the Indenture will be considered by the Issuer and the Trustee to be the owner or holder of the Bonds. Owners of any book entry interests in the Bonds (the book entry interest owners ) described below, will not receive or have the right to receive physical delivery of the Bonds, and will not be considered by the Issuer and the Trustee to be, and will not have any rights as, owners or holders of the Bonds under the bond proceedings and the Indenture except to the extent, if any, expressly provided thereunder. CERTAIN INFORMATION REGARDING DTC AND DIRECT PARTICIPANTS IS SET FORTH BELOW. THIS INFORMATION HAS BEEN PROVIDED BY DTC. THE ISSUER, THE UNDERWRITER AND BOND COUNSEL ASSUME NO RESPONSIBILITY FOR THE ACCURACY OF SUCH STATEMENTS. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over two million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues and money market instruments from over 85 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges among Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a whollyowned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is 6
owned by a number of Direct Participants of DTC and by Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, GSCC, MBSCC and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). The DTC Rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are too be redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the Record Date. The Omnibus Proxy will assign Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Payment of debt service and redemption proceeds with respect to the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s 7
receipt of funds and corresponding detail information from the Issuer or the Trustee on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Trustee or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and debt service to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. BENEFICIAL OWNERS SHOULD CONSULT WITH THE DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS FROM WHOM THEY PURCHASE A BOOK ENTRY INTEREST TO OBTAIN INFORMATION CONCERNING THE SYSTEM MAINTAINED BY SUCH DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS TO RECORD SUCH INTERESTS, TO MAKE PAYMENTS, TO FORWARD NOTICES OF REDEMPTION AND OF OTHER INFORMATION. THE ISSUER AND THE TRUSTEE HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS OF THE RECORDS OR NOTICES RELATING TO, OR PAYMENTS MADE ON ACCOUNT OF, BOOK ENTRY INTEREST OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO THAT OWNERSHIP. The Trustee and the Issuer, so long as a book entry method of recording and transferring interest in the Bonds is used, will send any notice of redemption or of any Indenture amendment or supplement or other notices to Bondholders under the Indenture only to DTC (or any successor securities depository) or its nominee. Any failure of DTC to advise any Direct Participants, or of any Direct Participants or Indirect Participants to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Bonds called for redemption, the Indenture amendment or supplement, or any other action premised on notice given under the Indenture. The Issuer and the Trustee cannot and do not give any assurances that DTC, Direct Participants, Indirect Participants or others will distribute payments of debt service on the Bonds made to DTC or its nominee as the registered owner of the Bonds, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will serve and act in a manner described in this Preliminary Official Statement. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered. Security. The Bonds are special obligations of the Issuer payable solely, except as otherwise set forth in this Official Statement, from moneys derived from payments by the Borrower to the Issuer pursuant to the Lease Agreement. The Bonds and interest thereon are obligations only of the Issuer and in no event shall the Bonds or interest thereon constitute an indebtedness of the State or an indebtedness for which the faith and credit of the State or any of its revenues are pledged or an indebtedness secured by a lien on or a security interest in any property of the State. 8
As security for the Bonds, the Issuer will assign and pledge to the Trustee in the Indenture all of its rights (other than certain rights and interests relating primarily to indemnification and payment of fees and expenses) to receive revenues under and pursuant to the Lease Agreement. The Lease Agreement provides that the Borrower shall be obligated to make payments sufficient in the aggregate to pay when due the principal of and premium, if any, and interest on the Bonds. The Corporate Guaranty. Under the terms of a Guaranty Agreement dated as of October 27, 2010 (the Guaranty ) the Borrower, and its parent company Nordex SE, unconditionally guarantees to the Trustee for the benefit of the owners from time to time of the 2010 Series B Bonds the full and prompt payment of the principal of the 2010 Series B Bonds when and as the same becomes due, whether at the stated maturity thereof, by acceleration, call for redemption or otherwise, and the full and prompt payment of interest on the 2010 Series B Bonds when and as the same becomes due. All payments shall be paid in immediately available funds in lawful money of the United States of America. Each and every default in payment of the principal of or interest on the 2010 Series B Bonds shall give rise to a separate cause of action, and separate suits may be brought as each cause of action arises. For a description of the Borrower and its parent company, Nordex SE, see Appendix A hereto. The Guaranty does not secure the 2010 Series A Bonds. Debt Service Reserve Fund. There is created with the Trustee special funds to be designated (1) City of Jonesboro, Arkansas Economic Development Debt Service Reserve Fund (2010 Series A) or 2010 Series A Debt Service Reserve Fund, and (2) City of Jonesboro, Arkansas Recovery Zone Facility Debt Service Reserve Fund (2010 Series B) or 2010 Series B Debt Service Reserve Fund, which shall be used and applied as specified below. For purposes of this summary, the 2010 Series A Debt Service Reserve Fund and the 2010 Series B Debt Service Reserve Fund are referred to collectively at times as the Debt Service Reserve Funds. There shall be deposited into the Debt Service Reserve Funds an amount equal to the Required Reserve pursuant to the delivery instructions received by the Trustee at the bond closing. The Required Reserve with respect to the 2010 Series A Bonds is an amount equal to two months maximum debt service on the Series 2010 A Bonds (the 2010 Series A Required Reserve ); the Required Reserve with respect to the 2010 Series B Bonds is an amount equal to the lesser of the maximum annual debt service or 10% of the par amount of the Series 2010 B Bonds (the 2010 Series B Required Reserve, and collectively with the 2010 Series A Required Reserve, the Required Reserves ). The funds held in the Debt Service Reserve Funds may be invested as provided in the Indentures, and any earnings from the investment of such funds shall be deposited into the Bond Funds. Each month as long as any of the Bonds are outstanding, the Trustee shall transfer from the Debt Service Reserve Funds to the Bond Funds any amounts in that fund that are in excess of the Required Reserve. One day prior to each Interest Payment Date or any date on which Bonds are due as a result of a call for redemption or maturity or as a result of the occurrence of an Event of Default, the Trustee shall determine if sufficient funds will be available in the Bond Funds to pay in full the principal, if any, and interest on the Bonds due on the next day. If sufficient funds will not be available in the Bond Funds, the Trustee shall immediately transfer an amount equal to the amount of such deficiency from the Debt Service Reserve Funds to the Bond Funds. Any funds remaining in the Debt Service Reserve Funds immediately prior to the payment of all the Bonds then outstanding (whether at stated maturity or upon optional or mandatory redemption or as a result of acceleration), shall be transferred into the Bond Funds. 9
Security Provisions Specific to 2010 Series A Bonds. The payment of principal of and interest on the 2010 Series A ADFA Guaranteed Bonds is guaranteed by the Authority under the ADFA Guaranty, all as described herein. See THE GUARANTIES The ADFA Guaranty. The payment of principal of and interest on the 2010 Series A AEDC Guaranteed Bonds is guaranteed by the Commission under the AEDC Guaranty, all as described herein. See THE GUARANTIES The AEDC Guaranty. The 2010 Series B Bonds are not secured by the ADFA Guaranty or the AEDC Guaranty. Redemption. The Bonds are subject to redemption prior to maturity as follows: Special Redemption. (a) Damage, Destruction or Legal Curtailment. On any interest payment date, the Bonds shall be redeemed in whole or in part, at the option of the Issuer at the direction of the Borrower, from the proceeds of insurance in the event of major damage or destruction of the Project pursuant to the provisions of the Lease Agreement, or from legal curtailment of the use and occupancy of all or substantially all of such Project for any reason other than condemnation. If called for redemption upon the occurrence of any of the events described in the preceding sentence, the Bond shall be redeemed in whole, in the manner provided in the Bond and the Indenture, at one hundred percent (100%) of the principal amount thereof, plus accrued interest to the date of redemption. (See THE LEASE AGREEMENT Optional Prepayment herein). (b) Event of Default under the Lease Agreement. At any time, the Bonds shall be redeemed in whole or in part, at the option of the Issuer, if the Issuer notifies the Trustee in writing that an Event of Default has occurred under the Lease Agreement and that it requests a redemption of such Bonds at a redemption price equal to one hundred percent (100%) of the principal amount being redeemed plus accrued interest to the redemption date. (c) Condemnation. On any interest payment date, the Bond will be redeemed in whole or in part from the proceeds of condemnation of all or substantially all of the Project at a redemption price equal to one hundred percent (100%) of the principal amount being redeemed plus accrued interest to the redemption date. (d) Unspent Proceeds. At any time, the Bonds shall be redeemed in whole or in part, at the option of the Issuer, from Bond proceeds not needed for construction or completion of the Project, upon notice to the Trustee at a redemption price equal to one hundred percent (100%) of the principal amount being redeemed plus accrued interest to the redemption date. Optional Redemption. On or after October 1, 2015, the Bonds (or any portion thereof in $5,000 multiples) will be subject to redemption prior to maturity, at the option of the Issuer upon the direction of such Borrower, in whole or in part, on any date (and by lot within a maturity in such manner as the Trustee may determine), at a redemption price equal to the principal amount being redeemed plus accrued interest to the date of redemption. 10
Sinking Fund Redemption. The 2010 Series A Bonds maturing on October 1, 2024 are subject to mandatory sinking fund redemption on the following dates and in the following amounts: Series 2010 A Bonds Bonds Maturing October 1, 2024 *Final Maturity Year Principal Amount ($) (October 1) 2022 815,000 2023 860,000 2024* 900,000 Notice of Redemption. Notice of the call for redemption shall be by first class mail or by other acceptable standard, including facsimile, to the owner or owners of the Bonds not less than twenty (20) days nor more than sixty (60) days prior to the date fixed for redemption, and published notice of the call for redemption need not be given. Each notice shall specify the numbers and the maturities of the Bonds being called, and the date on which they shall be presented for payment. For so long as the Bonds are registered in book entry form, notice of redemption may be made by facsimile transmission to the securities depository. Failure to give notice by mailing to the Owner of any Bond designated for redemption or to any depository of information service shall not affect the validity of the proceedings for the redemption of any other Bond. While the Bonds are being held by DTC under the book-entry system, notice of redemption will be sent only to DTC. See THE BONDS Book-Entry Only System herein. Selection of Bonds to be Redeemed. If the Bonds are being held by DTC under the book-entry system and less than all of such Bonds within a maturity are being redeemed, DTC s current practice is to determine by lot the amount of the interest of each DTC Participant (as hereinafter defined) in such maturity to be called for redemption, and each DTC Participant is to then select by lot the ownership interest in such maturity to be redeemed. See THE BONDS-- Book-Entry Only System herein. THE GUARANTIES NOTE: The 2010 Series B Bonds are NOT guaranteed in any way by the ADFA Guaranty or the AEDC Guaranty, and are payable solely from the amounts realized by the Issuer under the Lease Agreement relating to the Project financed with the proceeds of the Bonds. The ADFA Guaranty and the AEDC Guaranty apply only to the 2010 Series A Bonds. The ADFA Guaranty. General. The payment of the principal of and interest on a portion of the 2010 Series A Bonds (the 2010 Series A ADFA Guaranteed Bonds, having an aggregate principal amount of $6,000,000), is guaranteed by the Authority pursuant to the authority conferred by, and subject to the conditions specified in, Act 505 (the ADFA Guaranty Act ), also known as The Arkansas Development Finance Authority Bond Guaranty Act (the ADFA Guaranty ). 11
Limited Obligations. The obligations of the Authority as guarantor are limited to available moneys in the ADFA Guaranty Reserve Account created and being maintained pursuant to the authority conferred in the ADFA Guaranty Act. The moneys in that account stand behind all guaranties of the Authority, including the ADFA Guaranty with respect to the 2010 Series A ADFA Guaranteed Bonds. The Authority is authorized to guarantee any of its bonds issued under the Act, including industrial facilities, bonds for governmental capital improvements, educational facilities, health care facilities and housing developments. A tenyear history of bonds guaranteed by the Authority and balances in the ADFA Guaranty Reserve Account is as follows: AS OF DECEMBER 31 CUMULATIVE OUTSTANDING PRINCIPAL BALANCE OF ADFA GUARANTEED OBLIGATIONS 2000 73,771,464 23,688,597 2001 80,018,697 24,474,716 2002 86,538,122 22,747,040 2003 87,372,013 21,727,121 2004 85,404,806 22,120,400 2005 98,066,111 22,254,711 2006 95,782,739 21,685,139 2007 96,853,694 23,251,814 2008 95,252,426 23,947,023 2009 90,440,264 19,575,132 2010 (as of June 30) 94,992,660 17,501,627 12 BALANCE IN ADFA GUARANTY RESERVE ACCOUNT As of June 30, 2010, the debt service on thirteen (13) issues guaranteed by the Authority in the total outstanding principal amount of $17,970,613 was in default under the related repayment agreements, and the Authority is pursuing work-out arrangements, proceeding with foreclosure or liquidating collateral on these issues. Scheduled debt service and accelerated principal payment on those loans for the past year was $5,268,073 in principal and interest, of which $4,546,612 has been paid by the Authority. The amount paid was funded in part from recoveries from sales of related collateral, work-out agreements, etc., in the amount of $2,470,615. In cases of default on an underlying repayment agreement, the Authority may pay debt service on the related guaranteed bonds as the same becomes due, or may cause the maturity of such bonds to be accelerated or cause such bonds to be redeemed. There can be no assurance as to how the Authority may proceed with respect to any future default. The Authority is required under its outstanding guaranties and by the ADFA Guaranty Act to keep on deposit in the ADFA Guaranty Reserve Account sufficient funds to enable it to make when due all debt service payments guaranteed by it. If necessary to discharge its obligations under such covenant, the Authority is required to issue its own bonds (the Authority Bonds ) from time to time under Act 505 in sufficient amounts to insure that there will be available at all times in the ADFA Guaranty Reserve Account the necessary funds. Any Authority Bonds issued to fund such guaranty obligations as aforesaid are payable from earnings derived by the State Board of Finance from investments of the State of Arkansas s daily treasury balances ( Treasury Earnings ). See THE GUARANTIES Treasury Earnings for a discussion of the amount of Treasury Earnings, other pledges of Treasury Earnings, portions of Treasury Earnings that are unavailable to be pledged to secure any Authority Bonds, and related matters. In the event the Authority issues any Authority Bonds, it is required by law to notify the State Board of Finance as to the amount that will be needed each month to provide for the