DALLAS - Officials at Dallas-Fort Worth International Airport today will brief the Dallas City Council's finance committee on the airport's plans to refund up to $600 million of outstanding debt in the next two months.

Chief financial officer Christopher Poinsatte and Michael Phemister, vice president for treasury management, will outline the plans to issue fixed-rate bonds not subject to the federal alternative minimum tax to refund joint revenue bonds subject to the AMT issued from 2004 to 2008.

The same presentation will be made to the Fort Worth City Council committee next week. Both cities must authorize the bond sales.

"We are proposing two refundings, and we believe we have net present-value savings in both," Phemister said. "We also want to restructure the airlines' payments to provide them some relief through a lower rate base. This is a straight refunding deal. There is no new money involved in these tranches."

He said the federal stimulus act provides a two-year window for airports to refund their AMT debt with non-AMT bonds.

The AMT status was not significant when the spread with non-AMT debt was 10 to 30 basis points, Phemister said, but the only AMT debt issued since November 2008 had a spread of some 150 basis points.

"We need to take advantage of this opportunity to refund our AMT debt with non-AMT bonds," he said. "This window will close at the end of 2010."

DFW's joint revenue bonds are supported through fees paid by airlines operating from the airport, located between Dallas and Fort Worth. All the airport's currently outstanding joint revenue bonds are subject to the AMT.

Standard & Poor's rates the airport's joint revenue debt A-plus. Fitch provides a AA-minus rating for the debt, and Moody's Investors Service gives it an A1.

The refunding will include portions of four series of bonds issued between 2004 and 2008 totaling $642.2 million. DFW has $3.7 billion of outstanding debt.

The plans call for the pricing on Sept. 17 of up to $310 million of joint revenue bonds to refund portions of $99.3 million of outstanding debt from 2004, with coupons from 3.5% to 6.1%, and $240.6 million of outstanding debt from 2007, with coupons of 5%.

Parameters for the September sale include a maximum interest rate of 6% and final maturity not to exceed 2024. The airport estimated present value savings of $7.8 million and a net present-value benefit of 2.3%.

The airport will also seek to refund up to $300 million of callable bonds issued in 2004 and 2007. The $250.9 million of 2004 bonds have call dates of Nov. 1, 2009, and Nov. 1, 2014. The $100.4 million of 2007 bonds are callable on Nov. 1, 2014.

The schedule, which Phemister said was fairly firm, calls for the refunding bonds to be priced Oct. 7.

The actual amount involved will be determined by how many bonds are tendered between Sept. 4, when a tender notice will be published, and Oct. 2, when the offer expires.

"We don't know how successful that will be," Phemister said. "We won't do it unless we get at least $50 million of bonds tendered, and we won't do more than $300 million."

The airport may consider another refunding issue in fiscal 2010 - which begins Oct. 1 - if the current offering is successful, he said, and may go to market in late 2010 with a new-money deal.

DFW Airport's bond counsel are Vinson & Elkins LLP and McCall, Parkhurst and Horton LLP. Co-financial advisers are Estrada Hinojosa & Co. and First Southwest Co.

Senior manager on the transaction team for the September sale is Siebert Brandford Shank & Co., with Morgan Keegan & Co. as co-senior. Co-managers include Cabrera Capital Markets LLC, M.R. Beal & Co., Merrill Lynch & Co., RBC Capital Markets, Ramirez & Co., and Raymond James & Associates.

Morgan Stanley is senior manager for the October sale, with Jefferies & Co. and Loop Capital Markets LLC as co-managers.

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