Florida Bridge Authority to Sell $170M of Springing-Lien Bonds

BRADENTON, Fla. — North Florida’s Mid-Bay Bridge Authority expects to price $170 million of new and refunding springing-lien revenue bonds Thursday.

Proceeds from $145 million of Series A bonds will finance an 11-mile expressway connector from the north end of the existing Mid-Bay toll bridge to State Road 85, and pay capitalized interest through July 2014, debt service reserves, and costs of issuance. The new-money portion of the deal is structured with 30-year maturities.

The deal includes $25 million of Series B refunding bonds without extending maturities of various series being refunded.

A majority of the refunding will take out all existing junior-lien bonds and replace them with new springing-lien bonds, said Greg Carey, a managing director in the public sector and infrastructure banking group at Goldman, Sachs & Co.

Goldman and Merchant Capital LLC are underwriting the deal.

The springing-lien bonds are subject to 1.2 times annual debt-service coverage. As soon as the bonds meet the additional bonds test of 1.4 times maximum annual debt-service coverage, they spring to parity with the authority’s outstanding senior bonds, Carey said.

The authority must meet an additional bonds test, which means new debt cannot be issued until a certain debt-service coverage level is met.

The bonds will be fifth in line to be paid in the flow of funds from toll ­revenue collections following payment of ­authority administrative expenses, senior-lien debt service, senior-lien reserves, and ­senior-lien swap payments. Carey said all ­reserves will be fully funded.

The springing-lien structure has strong features designed to protect bondholders from dilution, he said, noting that no new debt will be issued above them. Using the structure is purely for the benefit of the bondholders, according to Carey.

“Hopefully, we’ll get a better rate ­because of it,” he said. “We view our bondholders as our stockholders and want to give them as much protection as we can give them.”

Standard & Poor’s rated the bonds BBB-minus and estimated the additional bonds test would be satisfied in 2018.

The bonds were rated BBB by Fitch Ratings, which said that conversion of springing-lien bonds to senior lien could potentially dilute senior-coverage levels to the minimum requirement under the additional senior-lien bonds test.

Both rating agencies affirmed BBB-plus ratings on the senior-lien bonds.

The Mid-Bay Bridge is a 3.6-mile-long, two-lane toll bridge that opened in June 1993. It is the authority’s sole asset.

The bridge crosses the Choctawhatchee Bay and the Gulf Intracoastal Waterway in Okaloosa County, connecting Niceville to Destin and its well-known white sandy beaches.

Analysts said the bridge is a key transportation link with strong support through an operating and maintenance agreement with the Florida Department of Transportation. Repayment of FDOT costs are deeply subordinated and paid after administrative costs and debt service.

The bridge has suffered annual traffic declines since fiscal 2007 as a result of the 18-month recession that ended in June of 2009 and the oil spill in the Gulf of Mexico. A toll increase last June offset some declining revenue.

The connector is expected to induce additional traffic on the toll bridge after opening in January 2014. The project is supported by nearby Eglin Air Force Base, which is experiencing growth due to the Base Realignment and Closure Act.

Because the springing-lien bonds are rated in the triple-B category, they most likely will be attractive to institutional investors, Carey said.

“The bridge has had a long, storied history that has been very, very positive,” he said. “It changed the economy of the three-county area when it was built. It continues to foster growth and commerce.”

Bryant Miller Olive PA is bond counsel on the deal. Underwriters’ counsel is Winstead PC.

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Transportation industry Florida
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