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HomeMy WebLinkAboutRes 1998-03 Bradley Power Revenue Bonds• ~ID~ 1~8~~ ------------~----------------------------------- 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 I 269-3000 MEMORANDUM DATE: December 16, 1998 SUBJECT: Issuance of Alaska Energy Authority Power Revenue Bonds, Fifth Series (Bradley Lake Hydroelectric Project) FAX 907 I 269-3044 Due to a very favorable interest rate climate, AEA has been asked by the Bradley Lake Project Management Committee ("PMC") to enter into a Forward Delivery Bond Purchase Agreement ("Agreement"). The Agreement commits AEA to issue; on or about April 13, 1999, up to $32,000,000 of its Alaska Energy Authority Power Revenue Refunding Bonds, Fifth Series (Bradley Lake Hydroelectric Project) to refund up to $29,010,000 of First Series bonds originally issued in 1989. The Bradley Lake bonds currently outstanding are "private activity bonds" under federal tax law and are therefore not eligible for advance refunding. However, the Authority is able to enter into a "forward refunding" transaction in which a buyer commits today to buy a series of current refunding bonds on a legal issuance date (up to 90 days before the call date) at a yield level fixed today. Resolution 1998-03 ("Resolution") authorizes entering into the Agreement and the sale of the bonds as well as granting the Executive Director the authority to approve the pricing and finalize the documents to consummate the transaction. The Agreement is in substantially final form but the Preliminary Official Statement cannot yet be deemed final; some changes with respect to the information regarding the Purchasing Utilities are anticipated to be made. As you are aware, AEA owns the Bradley Lake Project. The currently outstanding First and Second Series bonds are secured by the revenues from power sales from the Project, as will be the Third Series bonds (to be issued in April 1999) and. Fourth Series bonds (to be issued in April 2000); the Fifth Series bonds will be secured from the same source. The outstanding bonds are also secured by bond insurance as will the Third and Fourth Series bonds. Insurance is expected to be obtained for the Fifth Series bonds. The First through Fourth Series bonds are (or will be) further secured by a capital reserve fund that has the moral obligation of the State; the new issue will also be secured by a capital reserve fund and the State's moral obligation, but when the Fifth Series bonds are issued, the reserve fund requirement will decrease. Board of Directors December 16, 1998 Page2 The principal amount of refunding bonds will be greater than the amount of existing bonds that will be refunded, in order to provide funds to pay costs of issuance of the refunding bonds. Using December 3, 1998 rates, the net present value savings of refunding the bonds would have been $3.3 million or 11.24%. All of the savings will directly benefit the utilities that purchase power from the Project. · Assuming Board approval of the transaction and a continued favorable interest rate environment, the forward transaction is currently scheduled to price and close in early February 1999. As provided in the Resolution, the Authority will not execute the final Agreement until the PMC expressly authorizes and approves the specific details of the transaction and requests that we enter into the transaction. If some unforeseen occurrence causes the bond issuance to be postponed past April 1, 1999, this transaction will not be consummated. If it still appears that a refunding transaction would provide favorable results, the Board will be asked to approve a current refunding transaction in 1999. H:\ALL\BJF\FINANCEWFW'\Bradley12-16.1.doc ALASKA ENERGY AUTHORITY RESOLUTION NO. 1998-03 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF POWER REVENUE REFUNDING BONDS, FIFTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT), IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $32,000,000 AND DETERMINING RELATED MATTERS BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority on the 16th day of December 1998, that pursuant to the Power Revenue Bond Resolution adopted on September 7, 1989 (hereinafter referred to as the "Resolution"), this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority Section 101 -Short Title. This Resolution may hereafter be cited by the Authority, and is hereinafter sometimes referred to, as the "Fourth Supplemental Resolution." Section 102 -Definitions. (A) All defined terms contained in the Resolution shall have the same meanings, respectively, in this Fourth Supplemental Resolution as such defined terms are given in Section 102 of the Resolution. (B) In addition, as used in this Fourth Supplemental Resolution, unless the context shall otherwise require, the following terms shall have the following respective meanings: "Beneficial Owner'' means the person in whose name a Bond is recorded as the beneficial owner of such Bond by the respective systems of DTC and the DTC Participants or the registered owner of the Bond if the Bond is not then held in book-entry form under Section 203. "Bonds" means the Fifth Series Bonds. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement executed by the Authority and dated the date of the Closing, as such term is defined in the Forward Delivery Agreement, and relating to the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. "DTC" means The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York, and its successors and assigns. "DTC Participant" means a trust company, bank, broker, dealer, clearing corporation and any other organization that is a participant cif DTC. "Fifth Series Bonds" means the Bonds of the Authority authorized by this Fourth Supplemental Resolution and herein designated "Power Revenue Refunding Bonds, Fifth Series." "First Series Bonds" means the Authority's Power Revenue Bonds, First Series (Bradley Lake Hydroelectric Project) issued in the initial aggregate principal amount of $105,001,142. "First Series Refunded Bonds" means the First Series Bonds maturing on July 1, 2021, or such portion thereof as the Executive Director may select in the Forward Delivery -Agreement. "First Supplemental Resolution" means the Supplemental Resolution of the Authority adopted under the terms of the Resolution on September 7, 1989. "Forward Deliverv Agreement" means the Forward Delivery Bond Purchase Agreement described in Section 301 hereof. "Letter of Representations" means the Blanket Issuer Letter of Representations dated October 24, 1997, from the Authority to DTC. "Settlement Date" means April13, 1999, or such other date or dates as may be established for the issuance of the Fifth Series Bonds pursuant to the terms of the Forward Delivery Agreement. "Underwriters" means Prudential Securities Incorporated representing itself and other underwriters which may be included in the Forward Purchase Agreement. Section 103 -Authority for this Resolution. This Fourth Supplemental Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization, Terms and Issuance Section 201 -Authorization, Principal Amount, Description and Series. (A) In order to provide funds necessary for the purposes specified in Section 205 of the Resolution, in accordance with and subject to the terms, conditions and limitations established herein and in the Resolution, a Series of Power Revenue Bonds is hereby authorized to be issued in an aggregate principal amount to be determined in accordance with Section 301 hereof. The Authority is of the opinion and hereby determines that the issuance of the Bonds in said amount is necessary to provide sufficient funds to be used and expended for the purposes specified in Section 202 of the Resolution. The Bonds of such Series shall be designated and entitled "Power Revenue Refunding Bonds, Fifth Series (Bradley Lake Hydroelectric Project)." (B) The Authority hereby finds and determines that the establishment in the Resolution of the Capital Reserve Fund will enhance the marketability ofthe Bonds. Section 202 -Purposes: Redemption Accounts. (A) The purpose for which the Bonds are bejng issued is to refund the outstanding First Series Refunded Bonds. (B) There is hereby established within the Construction Fund the First Series (2021 Maturity) Redemption Account. The Trustee shall deposit proceeds of the Bonds, together with other amounts held in other Funds or any accounts therein as directed by the Authority, AEA/Power Revenue Refunding Bonds, Fifth Series Resolution No. 1998-03 H:\ALL\BJF\BOARD\RESOLUTI\1998-03 Bradley.doc Page 2 into the First Series (2021 Maturity) Redemption Account and shall hold such proceeds and such other amounts in such account for the defeasance of the First Series Refunded Bonds in accordance with Paragraph 2 of Section 1201 of the Resolution; provided, however, that the Executive Director may instruct the Trustee to hold a portion of such proceeds or such other amounts for payment of Costs of Issuance, and the Trustee shall apply such proceeds or such other amounts to pay such costs as instructed by an Authorized Officer. On July 1, 1999, or as soon thereafter as possible, the Trustee shall apply the amounts then held in the First Series (2021 Maturity) Redemption Account to the redemption of the First Series Refunded Bonds in accordance with Section 206 of the First Supplemental Resolution. If any amounts remain in the First Series (2021 Maturity) Redemption Account after the redemption of the First Series Refunded Bonds, the Trustee shall treat such remaining amount as Revenues and shall forthwith transfer such Revenues to the Revenue Fund. Section 203 -Issue Date and Form; Book-Entrv. (A) The Bonds shall be dated April 1, 1999, or such other date as the Executive Director may select. (B) Subject to (E) of this Section, the Bonds shall be registered initially in the name of "Cede & Co.," as nominee of DTC, and shall be issued initially in the form of a single Bond for each maturity in the amount of such maturity. Registered ownership of the Bonds, or any portions thereof, may not thereafter be transferred except (i) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any substitute depository's successor; .. or (iii) to any person as provided in paragraph (E) below. (C) Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository or a determination by the Authority that it is no longer in the best interest of Beneficial Owners to continue the system of book-entry transfers through DTC or its successors (or any substitute depository or its successor), the Authority may appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (D) In the case of any transfer pursuant to clause (i) or (ii) of paragraph (B) above, the Trustee shall, upon receipt of all Outstanding Bonds, together with a written request of an Authorized Officer and a supply of new Bonds, authenticate a single new Bond for each maturity of Bonds then Outstanding, registered in the name of such successor or such substitute depository, or its nominee, as the case may be, all as specified in such written request. (E) In the event that (i) DTC or its successor (or substitute depository or its successor) is not available to function as depository for the Bonds or resigns from its functions as depository, and no substitute depository can be obtained, or (ii) the Authority determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bond certificates, the Bonds may be issued, or ownership of Bonds may then be transferred, to any person or entity as provided in .the Resolution, and the Bonds shall not, or shall no longer, be held in book- entry form. An Authorized Officer shall deliver a .written request to the Trustee to issue Bonds as provided in the Resolution in any authorized denomination, together with a supply of definitive Bonds. Upon receipt of all then Outstanding Bonds by the Trustee, together with a written request of an Authorized Officer to the Trustee, . new Bonds shall be issued and authenticated in such denominations and registered in the names of such persons as are AEA/Power Revenue Refunding Bonds, Fifth Series Resolution No. 1998-03 H:\ALLIBJF\BOARO\RESOLUTI\1996.03 Bradley doc Page 3 requested in such written request. (F) For so long as the Bonds are held in book-entry form under this Section, the Authority and the Trustee may treat DTC (or its nominee) as the sole and exclusive registered owner of the Bonds registered in its name for the purposes of payment of principal or Redemption Price of and interest on such Bonds, selecting such Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders under the Resolution, registering the transfer of such Bonds and obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever; and neither the Authority nor the Trustee shall be affected by any notice to the contrary. Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC Participant, or any other person not shown on the registration books of the Trustee as being a registered owner with respect to the accuracy of any records maintained by DTC or any DTC Participant, the payment by DTC or any DTC Participant of any amount in respect of the principal or Redemption Price of or interest on the Bonds, any notice which is permitted or required to be given to Bondholders under the Resolution, the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Bonds, or any consent given or other action taken by DTC as Bondholder. The Trustee shall pay from monies available under the Resolution all principal and Redemption Price of and interest on Bonds only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal or Redemption Price of and interest on the Bonds to the extent of the sum or sums so paid. Section 204 -Places and Manner of Payment. For so long as all Outstanding Bonds are registered in the name of Cede & Co. or its registered assigns, payment of principal and interest thereon shall be made as provided in the Letter of Representations and the operational arrangements referred to therein as amended from lime to lime. In the event that the Bonds are no longer registered in the name of Cede & Co. or its registered assigns, (i) payment of interest on the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee, or, upon the written request of a registered owner of at least $1,000,000 in principal amount of Bonds received at least 15 days prior to an interest payment date, by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner; and (ii) principal of the Bonds will be payable at the corporate trust office of the Trustee upon surrender of the Bonds representing such principal. Both principal of and interest on the Bonds are payable in any coin or currency of the United Slates of America which, on the respective dates of payment thereof, shall be legal tender for the payment of public and private debts. Section 205 -Maturities and Interest Rates. The Bonds shall be issued in denominations of $5,000 or any integral multiple thereof, shall mature on July 1 in the years and principal amounts, and shall bear interest at the rates all as determined by the Executive Director pursuant to Section 301 hereof. Section 206 -Numbers and Letters. Bonds shall be numbered and lettered in such manner as an Authorized Officer of the Authority shall determine prior to delivery thereof. AEA/Power Revenue Refunding Bonds, Fifth Series Resolution No. 1998-03 H:\ALL\BJF\BOARD\RESOLUTI\1998-03 Bradley.doc Page 4 Section 207 -Redemption. The Bonds shall be subject to redemption (including redemption by application of sinking fund payments) as determined by the Executive Director pursuant to Section 301 hereof. Section 208 -No Redemption of Bonds from Construction Fund Moneys. The Bonds shall not be subject to redemption pursuant to subsection 503(8) of the Resolution. ARTICLE Ill Sale and Delivery of Bonds Section 301 -Sale of Bonds. (A) The Executive Director is hereby authorized to sell the Bonds pursuant to a Forward Delivery ·sand Purchase Agreement between the Underwriters and the Authority. The executed Forward Delivery Agreement shall be in substantially the same form and content as the draft Forward Delivery Agreement presented to and made a part of the records of this meeting. The form and content of the Forward Delivery Agreement be, and the same hereby is, in all respects authorized, approved and confirmed, and the Chairman or Vice Chairman or the Executive Director be, and each of them hereby is, authorized, empowered and directed to execute and deliver the Forward Delivery Agreement for and on behalf of the Authority to the Underwriters for the sale of the Bonds substantially in the form and content presented to and made a part of the records of this meeting, but with such changes, modifications, additions, and deletions therein as shall to them seem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions thereto from the form, and after the execution and delivery of the Forward Delivery Agreement, the Chairman, Vice Chairman and the Executive Director are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Forward Delivery Agreement as executed; provided, however, that notwithstanding the foregoing neither the Chairman, Vice Chairman, nor Executive Director are authorized, empowered, or directed to execute or deliver the Forward Delivery Agreement until the Project Management Committee for the Project shall have approved the final terms of the Forward Delivery Agreement and shall have requested the Authority to execute and deliver the Forward Delivery Agreement. (B) In connection with the final preparation and execution of the Forward Delivery Agreement, in addition to the powers granted to the Executive Director in (A) of this Section, there is hereby delegated to the Executive Director the following powers: (i) to fix (a) the aggregate principal amount of the Bonds (provided that the aggregate principal amount of the Bonds shall not exceed $32,000,000), (b) the maturity schedule and interest rates applicable to each maturity of the Bonds (provided that the true interest cost of the Bonds shall not exceed 6.0%), and (c) the redemption and sinking fund provisions applicable to the Bonds (including the methodology for crediting sinking fund payments in the event of a redemption of the Bonds in part other than by application of sinking fund payments) and (ii) to determine whether any of the Bonds shall be covered by bond insurance and, if so, to select the bond insurance company and enter into such agreements with such bond insurance company as may be necessary to provide such bond insurance. Section 302 -Approval of Official Statement; Continuing Disclosure. (A) The distribution of the Preliminary Official Statement of the Authority in the form presented to and made a part of the records of this meeting is approved. The distribution of a final Official AEA/Power Revenue Refunding Bonds, Fifth Sen'es Resolution No. 1998-03 H:\ALL\BJF\BOARD\RESOLUTI\199$-03 Bradley.doo Page 5 Statement, which is in substantially the form and content of the draft Official Statement, and the use thereof by the Underwriters in connection with the offering of the Bonds, is hereby ratified, confirmed and approved. There is hereby delegated to the Executive Director the power to deem the Official Statement, or any draft thereof which he considers appropriate, final on behalf of the Authority for purposes of Securities and Exchange Commission Rule 15c2-12(b)(1). (B) The Authority hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement as the Continuing Disclosure Agreement may be completed and attached as an Exhibit to the final Official Statement. Notwithstanding any other provision of the Fourth Supplemental Resolution, failure of the Authority to comply with the Continuing Disclosure Agreement shall not be considered a default of the Authority's obligations under this Fourth Supplemental Resolution, the Resolution or the Bonds; however, the Beneficial Owner of any Bond may bring an action for specific performance, to cause the Authority to comply with its obligations under this Section. Section 303 -Investment Agreements. The Chairman or Vice Chairman or the Executive Director be, and each of them hereby is, authorized and empowered to execute and deliver appropriate investment agreements with financial institutions providing for investment of proceeds of the Bonds and amounts to be transferred from other funds of the Authority to secure the Bonds in such form and on such terms and conditions as they deem appropriate. Section 304 -Deliverv of Bonds. The Chairman, Vice Chairman, Executive Director and such other person or persons as may be designated by the Executive Director are specifically designated as Authorized Officers as defined in the Resolution, and they hereby are severally authorized, after execution of the Bonds, to deliver the Bonds to the Trustee for authentication under the Resolution and, upon authentication and upon receipt of the balance of the purchase price of the Bonds, to deliver to the Trustee a written order in the name of the Authority directing the Trustee to deliver the Bonds to or upon the order of the Underwriters and to receive the proceeds of sale of the Bonds and give a written receipt therefor on behalf of the Authority, to apply said proceeds and the other moneys required to be transferred or deposited in accordance with the terms of the Resolution and this Fourth Supplemental Resolution and in such manner as is required to cause the conditions precedent to the issuance of the Bonds to be complied with, and to do and perform or cause to be done and performed, for and on behalf of the Authority, all acts and things that constitute conditions precedent to the authentication and delivery of the Bonds or that are otherwise required or convenient to be done and performed by or on behalf of the Authority prior to or simultaneously with the delivery of the Bonds. Such Authorized Officers are hereby severally authorized for and on behalf of the Authority to do or cause to be done all acts and things required or desirable to be done by the Authority under and pursuant to the terms of the Resolution and in accordance with the terms and conditions of the Forward Delivery Agreement. · ARTICLE IV Paying Agent Section 401. U.S. Bank Trust National Association is appointed Paying Agent for the . Bonds pursuant to Section 902 of the Resolution. AEA/Power Revenue Refunding Bonds, Fifth Series Resolution No. 1998~03 H.\All\BJF\BOARD\RESOlt.m\1998-03 Bradley doc Page 6 ARTICLE V Effective Date Section 501. This Resolution shall take effect immediately. Supplemental Resolution approved and adopted by the Alaska Energy Authority on December 16, 1998. [SEAL] ATTEST: AEAIPower Revenue Refunding Bonds, Fifth Series Resolution No. 1998-03 H:\ALL\BJF\BOARD\RESOLUTI\1998-03 Bradley.doc ALASKA ENERGY AUTHORITY L];\c_ IlL Chairman Page 7