DALLAS — The Louisiana Bond Commission will meet in special session March 1 for the competitive sales of $449 million of state general obligation bonds.

The issues will include $400 million of new-money and $49 million of refunding bonds.

Commissioners approved the special session to accept the low bids on the bonds at Thursday’s regular monthly meeting.

Louisiana uses proceeds from GOs to reimburse the lines of credit used to finance state projects and capital improve.

Commission director Whit Kling Jr. said the proceeds from the March 1 sale would reduce the state’s unfunded lines of credit for capital outlays to $1.47 billion.

The sale was originally scheduled to be completed by the February meeting, Kling said, but due to “market factors and other issues” it did not occur as planned.

The special session is necessary because the sale cannot de delayed until the March 15 meeting, Kling said.

“There is concern that one fund would run out by then without these proceeds,” Kling said. The meeting would also conflict with the opening of the 2012 legislative session, he said.

Kling and financial advisor Renee Boicourt of Lamont Financial Services were authorized at the January meeting to accept low bids in lieu of the full commission, but Kling said the commission’s legal counsel questioned the validity of that procedure.

“I can’t find a statutory citation that says the commission cannot delegate that authority, but they are uncomfortable with it,” he said.

State Treasurer John Kennedy, chairman of the commission, explained to several new members that the panel reviews the bids live on the internet and accepts the lowest ones.

“It’s just like an eBay auction,” Kennedy said.

“But in reverse,” Kling added.

There will be two 30-minute bidding periods, Kling said, with a 15-minute validation period between the sessions.

“And we’ll see all the bids coming across in the last 45 seconds,” Kennedy said.

Foley & Juddell LLP was selected as bond counsel to assist in the proposed negotiated refunding of up to $400 million of outstanding gas and fuel tax revenue bonds issued in 2002, 2005, and 2006.

The anticipated refunding savings will be reduced because the bonds currently carry swap termination penalties, Kling said. However, he said, the net present-value savings still will be significant.

“We want to pursue this refunding relatively quickly,” Kling told the commission. “The savings will be tremendous, many millions of dollars.”

The liability on the state’s variable-rate fuel revenue bonds totaled $193.3 million on Jan. 31, based on market-to-market valuations, according to a report distributed to commissioners.

The state will also seek to extend or replace existing hedge agreements associated with two tranches of gasoline and fuel tax revenue debt issued in 2009 as variable-rate Build America Bonds. The existing agreements on the $182 million of BABs will expire May 1.

The state will consider a negotiated refunding $60.2 million of the outstanding BABs issued as the 2009A-4 tranche if it would be more economical, Kling said.

Kling said the commission may need to hire tax counsel to determine if the BABs can be refunding without losing the federal interest subsidy.

The commission will be dealing with hedge agreements on the bonds issued for the highway department until their final maturity in 2043, Kling said, but Kennedy said the concern may be shorter lived.

“The hedge agreements will not be a problem if interest rates go up, and frankly I hope they do because that means the economy is doing well,” Kennedy said. “What is a penalty now could turn positive.”

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