In executing the financing, Longhouse will work with management to finalize a Plan of Finance; assist in a Request For Proposal (RFP) process to solicit proposals from a number of potential financing partners; assist the organization in selecting a financing partner; conduct negotiations to finalize covenants and pricing; and quarterback the documentation for the financing and the closing process. Specific services provided during each of these sub-phases are laid out below.
Develop Plan of Finance
Longhouse, together with organization management, will draft a plan of finance, including structure, amortization, final maturity and security for the debt. Longhouse will make a recommendation of whether the organization should pursue fixed or variable rate debt; taxable or tax-exempt or several options in tandem.
Assist in RFP Process
To aid in the selectoin of financing team members such as Placement Agent, Bond Counsel, Trustee, Escrow Agent, Verification agent, Remarketing Agent, Longhouse can conduct a competitive RFP process, as determined by the client. Longhouse will also assist in a RFP process for determining the optimal financing partner, whether it be for a publicly-issued or privatedly placed bond issue.
Should the organization decide to pursue a publicly-issued bond issue, Longhouse will conduct an RFP process to select an underwriter for the Bonds. Should the organization select a direct bank placement as its course of action, Longhouse will assist with the development of a “Credit Memorandum” for distribution to potential bank partners. The Memorandum will include a summary of the organization’s plan of finance, a timetable for completing the financing and detailed information on the organization sufficient to allow for a credit decision to be made on the proposed financing.
Evaluate and Help Organization Select a Financing Partner
Once bids from respondents are received by the organization, together with Management, Longhouse will evaluate, summarize, and rank the respondent bids with regard to all-in interest rate, annual debt service, experience of the bank, proposed covenants, security structure and prepayability. Longhouse will also evaluate intangible features such as the reputation of the respondent, review of their references, past work with similar organizations and any unique financing ideas discussed in the RFP response.
Longhouse will present its findings to the organization and provide recommendations and guidance, as requested, to assist the organization in negotiating with and selecting the most appropriate financing partner.
Once a financing partner has been selected by the organization, Longhouse would be responsible for the following tasks:
1. Work with the organization, selected financing partner and other team members to finalize details of the financing plan and complete a preliminary timetable.
2. Work with the chosen conduit issuer to gain needed approvals for the issuance of the bonds.
3. Act as the organization’s advocate in the document drafting process, quarterbacking the financing team and ensuring the financing is completed according to the terms proposed in the financing partner’s bid.
4. If a variable rate refinancing strategy is selected, work with the organization to consider hedging strategies.
5. If a fixed rate financing is selected, compare the Underwriter’s proposed pricing to other comparable tax-exempt financings currently in the market. If proposed rates are not consistent or “on-market,” Longhouse will seek additional information to explain the discrepancy and/or request changes in the interest rate scale to ensure a fair pricing.
6. Once swap or fixed rate bond pricing has been completed, work with the financing team to finalize bond documentation.
7. Provide advice on investment of bond funds, including disposition of debt service reserve fund, if necessary.
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