BRADENTON, Fla. – Bankrupt Jefferson County, Ala., is seeking bids from “competent” national underwriting firms to assist with its $1.89 billion sewer warrant refinancing obligation later this year.
A request for proposals was sent to eight firms to see if they are interested in becoming the lead banker for the transaction, which is expected to be brought to market by Dec. 20, immediately after the county exits Chapter 9 bankruptcy.
JPMorgan, which has agreed to collect only $375 million for the $1.2 billion in sewer debt that it already holds, reportedly is one of the firms being asked to respond. A complete list of the investment banks that received the RFP was not immediately available from the county.
The refinancing is part of the strategy for Jefferson County to exit bankruptcy. The county has adopted a course over the next few months for creditors to vote on an overall plan to deal with $3.2 billion of sewer warrants, and about $1 billion of other debt.
The RFP is asking underwriting firms to include the terms and conditions under which they would be willing to “extend credit or credit enhancement in connection with the refunding” and specify whether they are willing to purchase new sewer warrants for their accounts.
The RFP also directs prospective banks to a document recently filed by the county showing a proposed refinancing plan prepared by Public Financial Management Inc.
That plan calls for the deal selling later this year to include $1.417 billion of current interest bonds, $299.553 million of capital appreciation bonds, and $174.547 million of convertible CABs.
The new warrants will be supported by sewer system rate increases of 7.41% a year for four years, and 3.49% each year thereafter, though the percentages could be adjusted higher or lower as needed.
Underwriters’ proposals are due July 12. The county expects to adopt a resolution selecting a senior underwriter, or rejecting all submissions, by July 25.
In their responses, firms are also to include whether they would be interested in serving as part of a syndicate.
The county has already hired Balch & Bingham LLP as bond counsel and Bradley Arant Boult Cummings LLP as disclosure counsel for the refunding transaction.
Both firms work for the county advising on its bankruptcy case.
Though PFM assisted the county in preparing a potential refunding scenario, the RFP did not mention if the firm would serve as financial advisor on the transaction.
