Sims’ Retail Distribution and Charter School Expertise Deliver More Proceeds at Lower Costs
“As a charter school, a public school of choice for parents of K-12 students, the autonomy we are afforded is in exchange of being held accountable for student achievement, proper, while prudent, financial management, and adherence to our charter. We consider a component of prudent financial management to include the cost savings of the refunding of our school’s current bond for lower interest rates. Charter School for Applied Technologies was successful in completing this goal with the direction of the underwriting team of HJ Sims & Co.
HJ Sims’ commitment to deliver an equitable financial structure along with facilitation of our weekly calls and numerous requirements not only kept us on task, it also greatly assisted us towards our targeted goal – realignment of costs for proper reinvestment in the educating of our students. The provisions of the reduction of bond interest costs along with ‘new money’ allowed our school to construct a much needed high school addition.
I am so honored to have worked with such professionalism as garnered by the HJ Sims team! It is with great pride and admiration that I say a huge THANK YOU to the team for guiding our school through the bond refunding process!”
– Tanya Moore, Chief Financial Officer, Charter School for Applied Technologies
Charter School for Applied Technologies (“CSAT” or the “School”) is a New York charter school located in Buffalo. The School began operations in 2001 offering grades K-6 for 700 students. The School now serves grades K-12 and has increased enrollment to a total of 2,083 students. CSAT is now the largest charter school in the state of New York, with expansion plans for enrollment to 2,318 total students. The mission of CSAT is to deliver excellent academic education, providing skill sets relevant to careers in applied technologies. In doing so, the School emphasizes family involvement, partnership with local industry and community business leaders, as well as pride and success in student enterprise programs.
HJ Sims was engaged by the School to refinance its Series 2005 Bonds and issue new money debt in order to allow for the expansion to the existing high school. The high school expansion will enable CSAT to increase its enrollment and offer additional educational opportunities to its students. HJ Sims worked with CSAT to achieve the following strategic objectives:
- Reduce the School’s overall cost of capital;
- Reduce the School’s debt service related to the Series 2005 Bonds;
- Achieve a Present Value of Savings of 5% or greater on the refunding;
- Finance the $4,000,000 high school expansion, keeping debt service consistent with the Series 2005 Bonds.
In order to meet CSAT’s strategic financing objectives, HJ Sims recommended to the School a fixed rate, tax-exempt bond issue (the “2017 bonds”) with the same maturity as the bond issue to be refunded (the 2005 Bonds). The 2017 Bonds are rated “BBB-”/Stable outlook by Standard and Poor’s. HJ Sims worked with Standard and Poor’s during the financing process to reaffirm its BBB- rating. The investment grade rating provided for strong demand for the Bonds from institutional and private client investors.
HJ Sims successfully priced a $22,995,000 issue with an arbitrage yield of 3.86%. $22,845,000 of the issue was taxexempt, fixed-rate debt. A $150,000 taxable series was issued to provide for 100% financing of the project. On a net present value basis, the refunding of the Series 2005 Bonds provided savings to CSAT of over $4,000,000 or approximately 21% of the par amount of the refunded bonds. On an annual basis, the refunding saves roughly $340,000. The refinancing successfully met the School’s objective of reducing the School’s debt service related to the Series 2005 bonds and achieved a present value of savings greater than 5%. The yield on the Series 2017 longest term bond was 4.10%, achieving the School’s strategic objective to reduce the overall cost of capital.
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