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Type:
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Discussion
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Status:
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Presented
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On agenda:
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12/20/2023
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Final action:
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12/20/2023
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Title:
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Outcomes for the Tender Offer for a Portion of the Authority's Outstanding Bonds
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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Viola Miller, Chief Financial Officer |
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PRESENTER(S): |
Viola Miller, Chief Financial Officer |
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Brian Baker, Vice President Zion Public Finance |
TITLE:
title
Outcomes for the Tender Offer for a Portion of the Authority’s Outstanding Bonds
end
AGENDA ITEM TYPE:
Discussion
RECOMMENDATION:
Informational report for discussion on the final outcome of UTA’s bond tendering.
BACKGROUND:
A bond tender was offered by UTA to purchase bonds from investors that were either low coupon in nature, not callable, and/or worth less than other higher interest rate investments. Tendered bonds from the 2019B, 2020B, 2015 and 2016 series were purchased with the proceeds of a 2023 tax-exempt bond issue. UTA invited existing bondholders to “tender” their bonds at specified prices determined by UTA, its Municipal Advisor, and its Dealer-Manager (see below).
|
Series |
CUSIP Base 917567 |
Maturity Date |
Interest Rate |
Outstanding Par Amount |
Maximum Principal Amount to be Accepted |
Purchase Price (% of Par Amount) |
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2020B |
FR5 |
12/15/2033 |
2.375% |
$2,835,000 |
$2,835,000 |
79.178% |
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2020B |
FS3 |
12/15/2034 |
2.475 |
2,905,000 |
2,905,000 |
78.201 |
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2020B |
FT1 |
12/15/2035 |
2.575 |
2,965,000 |
2,965,000 |
77.322 |
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2020B |
FU8 |
12/15/2036 |
2.675 |
4,365,000 |
4,365,000 |
76.581 |
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2020B |
FV6 |
12/15/2039 |
2.970 |
61,680,000 |
61,680,000 |
75.649 |
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2019B |
EX3 |
12/15/2042 |
3.443 |
188,810,000 |
100,445,000 |
77.236 |
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Series |
CUSIP Base 9175671 |
Maturity Date |
Interest Rate |
Outstanding Par Amount |
Maximum Principal Amount to be Accepted for Purchase |
Purchase Price as a Percentage of Par2 |
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2016 |
CH0 |
12/15/2029 |
4.000% |
$18,865,000 |
$18,865,000 |
101.882 |
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2016 |
CF4 |
12/15/2030 |
4.000 |
29,915,000 |
29,915,000 |
101.229 |
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2016 |
CG2 |
12/15/2031 |
4.000 |
31,110,000 |
31,110,000 |
100.748 |
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2015A |
BD0 |
6/15/2024 |
5.000 |
33,255,000 |
33,255,000 |
101.256 |
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2015A |
BE8 |
6/15/2025 |
5.000 |
34,385,000 |
34,385,000 |
103.127 |
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2015A |
BK4 |
6/15/2024 |
5.000 |
7,100,000 |
7,100,000 |
101.146 |
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2015A |
BL2 |
6/15/2025 |
5.000 |
13,315,000 |
13,315,000 |
102.919 |
DISCUSSION:
Parameters set by the Board in July 2023:
• Net Savings % need to exceed 5%
• Net Present Value Savings should exceed $6M
• Tendering offers should only be to 2015A and 2016 tax exempt, and 2020, 2019B and 2020B taxable bondholders maturing debt prior to December 15, 2042
• Refunding bonds should not exceed the original tendered bond
• Time to perform the tendering should be a year
Outcome of the Bond Tendering in October 2023
• Net Savings % was 6.2%
• Net Present Value Savings $6,290,481
• Tendering offers were only accepted on the 2015A tax exempt, 2019B and 2020B taxable bonds. No 2016 bonds were accepted due to higher tax-exempt rates, but that $80 million will be eligible for potential refunding in 2026.
• Tendering participation was overall 35.7% (based on total outstanding bonds) and 45% (based on maximum principal amount eligible for acceptance)
• UTA accepted $101,175,000 in tendered bonds (out of $155,110,000 that were submitted for tendering), but due to the meaningful discount at which taxable bonds were purchased, UTA only had to borrow $77,600,000 in tax-exempt refunding bonds to satisfy the tender.
ALTERNATIVES:
N/A
FISCAL IMPACT:
UTA reduced principal debt by $23,575,000 and saved overall interest of $11,481,261.64 over the next 20 years. The cost for this tendering was $826,815.61, which is included in the calculation of all savings numbers.
ATTACHMENTS:
N/A
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