Conduit Borrower or Borrower (The Charter School)
With the assistance of finance team professionals, the borrower:
- Defines the financing requirements
- Sets and implements debt management policies and procedures of the school
- Determines available resources for payment of principal and interest of new debt issue
- Selects the conduit issuer and local counsel
- Selects and manages the Municipal Advisor
- Selects and manages the other members of the financing team jointly with the Municipal Advisor
- Prepares the offering document
- Determines the compensation of the financing team
- Negotiates with the underwriter the final purchase price of the bonds with the help of the Municipal Advisor
- Works with the Municipal Advisor to submit an application for conduit financing to the UCSFA
- Works with the Municipal Advisor to answer any questions pertaining to the finances or operations of the school from the Authority, Authority’s Municipal Advisor, Authority’s Issuer Counsel, or Authority board members
- Executes the bond purchase agreement with the underwriter
- Adopts bond resolution and/or executes any trust indenture, loan agreement or other bond financing documents
- Pays principal and interest on the bonds as they become due
- Complies with tax and other covenants included in the bond financing documents
- Submits continuing disclosures to the MSRB’s Electronic Municipal Market Access (EMMA) system under the issuer’s continuing disclosure agreement
Municipal Advisor
- Acts in a fiduciary capacity for the borrower
- Develops requests for proposals and qualifications for underwriters, bond counsel, and bond trustees
- Assists in developing the plan of finance and related transaction timetable
- Identifies and analyzes financing solutions and alternatives for funding capital improvement plan
- Advises on the method of sale, taking into account market conditions and near-term activity in the municipal market
- Assists in preparation of any rating agency strategies and presentations
- Coordinates internal/external accountants, feasibility consultants, and escrow agents
- Assists with the selection of underwriters, underwriter compensation issues, syndicate structure, and bond allocations
- Assists in the selection of bond counsel and bond counsel compensation issues
- Assists with negotiated sales, including advice regarding retail order periods and institutional marketing, analysis of comparable bonds, and secondary market data
- Prepares preliminary cash flows/preliminary refunding analysis
- Advises the school on the qualifications for credit enhancement and strategies for attaining credit enhancement
- Prepares the financing application to the UCSFA, including addendums for credit enhancement
- Provides assistance in following up with issuer’s counsel, issuer’s municipal advisor, and Authority board members in answering questions
- Attends the application review meeting to answer any further questions from the Authority
Bond Counsel
- Drafts bond resolution, indenture, loan agreement, and/or other bond financing documents
- Reviews applicable law to confirm the issuer’s authority to issue the bonds and its conformity with other legal requirements
- Affirms issuer’s authorization of the bond offering
- Discloses and examines litigation that may jeopardize the validity of the bond issue
- Interprets arbitrage regulations and tax law
- Attests to the validity and enforceability of the bonds
- Provides guidance in structuring issues related to tax law
- Confirms tax-exempt status
- Drafts tax certificate
- Provides public notice for and schedules a public hearing required by the IRS before the Governor can approve the issuance of the tax exempt bonds, otherwise known as a TEFRA hearing
Underwriter/Senior Manager
- Has an arm’s-length relationship with the charter school
- Provides proceeds at closing and obtains funds from investors
- Manages the affairs of any underwriting syndicate formed in connection with a new issue
- Works with charter school and Municipal Advisor to design the plan of finance
- Develops the bond structure
- Assists in determining timing to sell bonds based on market conditions
- Assists in the development of the bond documents
- Assists in preparing any rating agency strategy and presentation
- Runs numbers providing quantitative analysis of financing structure
- Manages the pricing process
- Executes pre-sale marketing
- Solicits price views from syndicate members, which provides preliminary pricing indications among underwriters and customers about the offering range of a new issue
- Prepares distribution analysis
- Works with the charter school to determine how orders are filled from the bond pricing order period
- Executes the bond purchase agreement with the charter school
Rating Agencies
- Assesses the credit quality of the bonds
- Assigns rating to the bond issue
- Updates ratings periodically while debt is outstanding
Underwriter’s Counsel
- Drafts bond purchase agreement
- Advises underwriters regarding their legal positions with respect to the issue
- Advises underwriters on state and federal securities laws
- Assists underwriters in undertaking due diligence review and provides legal opinion that the official statement does not contain misleading information or omit materials
Trustee
- Acts in a fiduciary role for the benefit of bondholders in enforcing the terms of the trust indenture
- Transmits principal and interest payments from an issuer of municipal securities to the bondholders
- Holds and invests money in a construction fund, reserve fund, or other funds that serve as security for payment of debt service on the bonds
- Maintains records on behalf of the issuer that identify the registered owners of the bonds and related matters
- Represents the interests of bondholders in the event of a default
Conduit Issuer
- Provides access for charter schools to the tax-exempt bond market
- May select or limit eligible finance team members
- Receives and reviews financing applications for charter school financing
- Schedules open and public meetings with the charter school and their financing team to consider the application for approval
- Approves eligible schools for credit enhancement pursuant to 53G-5-606
- Verifies fair and competitive pricing on new bond issues
- Verifies fair and competitive finance team professionals’ fees
- Verifies timely filing of the charter school’s post issuance disclosures
School’s Legal Counsel
- Reviews all legal documents on behalf of the school
- May be internal, outside, or general counsel; may not be hired specifically for bond issues
- Assists in the drafting of the Official Statement and disclosure documents
- Issues the required local counsel’s opinion