Wednesday, January 25, 2012

LOCS Bond Refunding saves District taxpayers $6.1 million over the next six years.

The Board of Education of Lake Orion Community Schools is proud to announce the successful sale of its 2012 Refunding Bonds in the amount of $23,880,000.  The Bonds will be used for the purpose of refunding a portion of the School District’s outstanding 2002 School Building and Site and Refunding Bonds and to pay the costs of issuing the Bonds.
The 2012 Refunding Bonds reduce the School District direct interest expense approximately $2.7 million for the taxpayers and will occur through lower debt payments over the next 6 years.  The Bond refunding also results in an additional estimated $3.3 million savings because of the District’s reduced School Loan Revolving Fund liability,  bringing the total estimated savings to the District’s taxpayers to $6.1 million.   
In preparing to sell the 2012 Refunding Bonds, John Fitzgerald, Assistant Superintendent for Business and Finance, working with our financial advisor, Stauder Barch & Associates, Inc., requested that Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. ("S&P") evaluate the School District's credit quality.  S&P affirmed the School District’s outstanding underlying rating of "AA-".  The rating agency cited the School District's strong income levels, very strong reserves and overall low debt burden in their rationale for maintaining the rating of the School District at these levels.

The School District's financing was conducted by the Michigan investment banking office of the brokerage firm, Stifel Nicolaus, the financial advising firm, Stauder Barch & Associates, Inc. and the law firm serving as bond counsel, Clark Hill PLC.  The School District's 2012 Refunding Bonds were sold at a true interest rate of 1.54% with a final maturity of 2018 (a repayment term of approximately 6 years).
Brenda Voutyras, Managing Director with Stifel Nicolaus states, "Lake Orion Community Schools Bonds were well received by the bond market.  We saw a high level of demand and were able to take advantage of low rates that produced a very nice level of savings for the District and its tax payers."