Williams College will go to market on Tuesday with a $154 million negotiated sale of Series 2013P revenue bonds through the Massachusetts Development Finance Agency.
According to Williams’ vice president for finance and administration and treasurer, Frederick Puddester, the school, founded in 1793 in Williamstown, Mass., will refund about $96 million and earmark $58 million for capital needs, including further progress on the Stetson-Sawyer building project and rebuilding its athletic facilities.
The Stetson-Sawyer project involves renovating Stetson Hall and constructing a library and Internet technology center behind it, replacing Sawyer Library. Williams’ last bond sale, $89 million in 2011, funded the opening stage of the work.
“We’re doing this bond sale for a number of reasons. This is an excellent time to go to market. Interest rates are low and the second tranche of bonds for the library was pre-planned two years ago,” said Puddester. In addition, $7 million in bonds will supplement $15 million of fundraising university president Adam Falk undertook to rebuild facilities for the football, lacrosse, field hockey and track and field teams.
According to Puddester, the school will build the library and IT center with flexibility for future use. “Twenty years from now, they could remove the stacks and use it for something else if they want,” he said.
He said refunding Series H, K and L bonds should produce about $500,000 in annual savings -- roughly 20% for Series H and 10% for Series K and L.
Moody’s Investors Service and Standard & Poor’s rate the bonds Aa1 and AA-plus, respectively, both with stable outlooks. According to Moody’s, the college will have about $331 million in debt outstanding after Tuesday’s offering.
“The Aa1 rating reflects Williams’ superior market position as a highly selective, small, private liberal arts college. The college’s financial resources provide multiple times coverage of operations and debt and the college has a history of strong fundraising,” Moody’s said in its report. “Offsetting these strengths are narrowing operating results, elevated debt compared to cash flow and limited, albeit improved, liquidity for its rating category.”
Puddester said investor feedback has been “so far, so good.” He added: “People see us as a quality institution. They see an institution that stands among the top liberal arts colleges in the country. People like our selectivity.”
The school accepts only about 17% of its applicants. Undergraduate enrollment is about 2,000. According to Puddester, more than 60% of alumni donate to the school.
JPMorgan is lead manager for the negotiated sale. Public Financial Management Inc. is the financial advisor.
MassDevelopment is the state’s finance and development authority.
Edwards Wildman Palmer LLP is bond counsel. McCarter & English LLP is representing the underwriters.
