The Los Angeles Board of Airport Commissioners, the governing body for Los Angeles World Airports, this week approved the sale of up to $1.625 billion of revenue bonds for Los Angeles International Airport.

The board approved up to $925 million of refunding bonds and $700 million of new money debt to support capital improvements at LAX, including the renovation of the Tom Bradley International Terminal, airfield improvements and baggage screening systems.

The bonds will be sold as fixed-rate debt and will include a series of taxable Build America Bonds and four series of tax-exempt debt, taking advantage of bond-related provisions in the American Recovery and Reinvestment Act of 2009. The deal will include senior and subordinate debt series.

The act created taxable BABs, which carry a 35% interest rate subsidy from the U.S. Treasury, to increase financing options for governmental purpose debt, and it extended the traditional muni tax exemption to private activity bonds that normally pay interest subject to the federal alternative minimum tax.

The potential refunding amount includes $610 million of non-callable AMT bonds, sold as Series 2008A and 2008B. LAX is issuing an optional tender for the bonds and will refinance as much of the amount as it gets back at economical rates. Goldman Sachs & Co. is managing the tender.

Barclays Capital, Morgan Stanley & Co. and Ramirez & Co. are book-running senior managers on the bond deal. Kutak Rock LLP and Quateman LLP are co-bond counsel.

Frasca & Associates LLC and Public Resources Advisory Group are the financial advisers.

LAX, which has about $1.2 billion of debt outstanding, is in the midst of its biggest capital improvement plan since before Los Angeles hosted the Summer Olympics in 1984. Last summer, the airport sold about $950 million of new money bonds to begin the improvements.

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