Financial advisers interested in advising Wisconsin on its proposed restructuring of its $1.6 billion tobacco securitization from 2002 have until Wednesday, Aug. 27, to submit their proposals to the state’s capital finance office. About $1.4 billion is still outstanding.
In the coming weeks, the state will launch a request for proposals for underwriters. The financial advisory firm or firms selected will help the state pick an underwriting team and craft a transaction. The state had previously named a team but dramatic industry changes prompted the need for a revised team, said capital finance director Frank Hoadley.
Bear, Stearns & Co. was to be the book-runner, but it has since been acquired by JPMorgan. UBS Securities LLC was also on the team but it has exited the municipal market. First Albany Capital Inc. was to be the financial adviser but it has since evolved into Depfa First Albany Securities LLC and its stronger capital base puts it in the position to vie for a role on the underwriting team. Several key tobacco bankers have also moved to other firms.
The state included in its current budget the restructuring plan, but the deal had been on hold last year due to increased interest rates. The bonds are repaid with Wisconsin’s share of payments under the 1998 national settlement between most states and the major tobacco companies. Under a revised plan, the state will put an annual appropriation behind the restructured bonds, which it expects will lower the interest rates on the debt and help kick-start the deal.
In addition to about $150 million in up-front savings earmarked to cover part of a budget deficit, officials also expect to generate at least $50 million in annual savings to establish an endowment to support health care and antismoking programs.
