Iowa Wesleyan College (Mount Pleasant, IA)
About the College
Iowa Wesleyan College ("IWC" or the "College") is a private four-year liberal arts college located in Mount Pleasant, Iowa. Founded in 1842, it ranks as Iowa's first co-educational institutional of higher learning and the oldest of its type west of the Mississippi River. The College serves approximately 800 undergraduate students.
The Longhouse Challenge
Longhouse was engaged in 2011 to assist the College in the financing of an energy retrofit project. The College's 75 year-old steam-pipe system was aging badly and repair costs ranged from $100,000-$300,000 annually. Installing a new campus-wide heating and cooling system and other retrofits would cost $5.0 million. While the College had preferred fixed rate debt in its prior financings, high rates in the fixed rate market made that option unsupportable. The College also had two other taxable loans with high rates and short amortizations. For the overall project cash flow to work, these obligations needed to be restructured. The College also wished to maintain the very liberal covenant structure it enjoyed with its outstanding fixed rate bonds.
Three potential financial partners were contacted for bids on the combined $7 million new money and refinancing. The winning bidder offered a 5-year credit commitment, a 4.0% rate, and a 20-year amortization. The commmitment was provided by a medium-sized bank with 4 other local bank participants.
The Bonds were issued in May 2011 as a tax-exempt, bank-qualified, direct bank placement. The College was able to maintain the same covenants as in the College's prior fixed-rate bond issue. Savings from the retrofit after annual debt service are projected at approximately $864,000 in the first 3 years alone.
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