North Little Rock, Ark., City Council last week approved a $60 million negotiated restructuring of the city’s electric system revenue bonds to avoid a large payment due in fiscal 2014.
The city was facing a $13.3 million debt service balloon payment in 2014 from a 2009 bond issue that financed a hydroelectric plant on the Arkansas River. The refunding will delay the final payment on the 2009 bonds until 2025.
Stephens Inc. is the lead underwriter. The Rose Law Firm is the city’s bond counsel. The bonds are rated A-minus by Standard & Poor’s.
The refunding will lower debt service on the electric department’s $74.6 million of outstanding bonds to $8 million a year from the current $13 million.
The proceeds will also provide $10 million so the utility can participate in an organized power purchase market.
Mike Russ, the general manager for the electric utility, said it will take $10 million to $14 million in cash to operate in the first year of the organized market.
The utility will purchase power on the open market when its current electric supply contract expires at the end of 2013.
The utility will also purchase $7 million for improved customer meters to better accommodate the new supply arrangement.
