School Board Looks to Save $ By Refinancing Bonds

Directors are pursuing lower interest rates on a series of bonds with hopes to save the district at least $650,000 through advanced refinancing up to $14 million.

Board of School Directors approved a resolution authorizing advanced bond refinancing and an underwriting engagement letter with a finance management company to carry out services during its Thursday.

Donald Mooney, executive director of operations, recommended district directors take advantage of current market interest rates, which, he said, have significantly reduced since last fall and, particularly, over the last three or four months.

The outstanding principal is $11,770,000, Mooney said.

March 15, 2014 is the call date on the 2004A series of general obligation bonds, the original date to refund. Mooney confirmed Director Donald Heller’s inquiring statement that the board is not extending the life of the bonds and the date would remain the same.

“This would be pure savings,” Heller said.

Director Donald Cadge asked if there were any risks involved. Mooney explained that refinancing would not go through if they can’t achieve a minimum of $650,000 in savings. He told Patch they hope to realize an interest rate between 2.2 and 3 percent.

Treasurer Douglas Carney noted it would be a straight refinancing of the bonds with no real sale.

The board approved R. W. Baird & Company, Inc. to serve as the managing underwriter for the refinancing of the 2004A bond series as well as the issuance of a 2012 series. The company’s fee is not to exceed .069 percent of the principal amount of the securities issued. It’s agreed that Baird & Co. would be paid out of the proceeds from the bond offering.

“Robert W. Baird & Co. is an employee-owned wealth management, capital markets, asset management and private equity firm with client assets of more than $87 billion,” the company’s website states. Founded in 1919, it’s based out of Milwaukee, Wis.

They will be responsible for taking the securities to market, coordinating services and completing documentation, Mooney said.

“If interest rates continue to be favorable, we will return to the board with more [money-saving] recommendations,” Mooney concluded that portion of the March 8 meeting.