College of Pharmacy
St. Louis College
of Pharmacy ("STLCOP" or the "College") is
one of the premier educators of pharmacists
in the U.S., and currently has about 1,350
It is one
of only a few pharmacy schools nationally
that enrolls undergraduate students,
offering a 7-year, integrated Bachelor of
Health Sciences and Doctorate in Pharmacy
In September of
2013, Longhouse Capital Advisors was engaged
to serve as Financial Advisor to the
College was planning to issue up to $80
million in fixed rate, new money bonds to
fund an academic building, a dining hall, a
student center and a residence hall.
addition, it was considering combining the
new money issue with a fixed rate
refinancing of up to $34 million in
currently callable bonds from 2006.
rising rates and dwindling indicative
savings had made the College question
whether the refinancing would be worthwhile.
owing in part to a rising rate environment
but also to a downgrade from STLCOP's prior
A- (S&P) rating to ratings of BBB+ (Fitch) /
BBB+ - Neg. (S&P).
The College asked
Longhouse to help it assess whether it
should issue its new money financings as one
issue or two, and to consider the impact of
an early-stage capital campaign on this
asked Longhouse to represent it in
discussions with the Underwriter about the
efficacy of including a mortgage and a debt
service reserve fund in the new bonds'
Longhouse was asked what the minimum level
of present value savings should be if the
College were to move forward with the
refinancing of its 2006 bonds.
with the College and review of its expected
project timetable, Longhouse recommended
splitting the new money financing into two
parts: $50 million in Phase 1 projects with bonds
sold in November 2013, and the remaining
Phase 2 funding to be done 12-18 months
would give the College time both to assess
the success of its capital campaign and to
refine the actual costs for Phase 2.
so, STLCOP hoped to reduce the ultimate
level of borrowing, or at least ensure it
was adequate for the needs of the second
phase of the project.
recommended a higher overall savings
threshold for refinancing the prior bonds -
a stipulation that resulted in the College
refinancing only the shorter maturities of
its existing bonds - about $22.4 million in all.
remaining $11.8 million of 2006 bonds will
be refinanced when the longer-maturity
unrefunded bonds can meet the higher
present value savings threshold, either when
the second-phase new money bonds are issued,
or on a standalone basis, if necessary.
As to the
security for the issue, Longhouse supported
offering a mortgage to bondholders, as it
was clear that this would result in a lower
Longhouse provided research showing that most
mid-to-high-level BBB-category higher
education financings could be sold without a
Debt Service Reserve Fund and without
negative rate consequences.
reserve fund, which would have raised
borrowing costs considerably, was ultimately
left out of the financing.
The $77.7 million new
money and refunding issue was priced on
November 13, 2013 with Wells Fargo as sole
preliminary pricing was more than 4 times
oversubscribed, with orders received from
over 40 market participants.
this strong interest, rates on the term
bonds were lowered and the College achieved
a True Interest Cost of 5.25%.
refunding portion of the financing achieved
present value savings of over $837,000,
representing 3.74% of the par amount of the
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