General Obligation Bond Refunding
April 20, 2017
DREXEL R-IV SCHOOL DISTRICT APPROVES GENERAL OBLIGATION BOND REFUNDING WITH A NET SAVINGS OF $346,238
At a regular meeting of the Drexel R-IV School District Board of Education on April 17, 2017, a refunding bond resolution was approved. It authorized the sale of $1,875,000 General Obligation Refunding Bonds at an average interest rate of 2.90%, compared to the $1,875,000 refunded portion of the Series 2014 Bonds which carry an average interest rate of 4.67%. The District reduces the future interest expense by $346,238, which is $37,590 more than what was presented at the Board of Education meeting on March 20, 2017, and shortens the final maturity of the Bonds by two full years. The Superintendent of Schools, Terry Mayfield, expressed enthusiasm and support for the refunding option selected by the Board of Education. "This plan allows the District to take advantage of current lower interest rates while preserving considerable flexibility to meet future building needs," Mr. Mayfield remarked.
The Board President, Chris Collins, pointed out that the $346,238 of interest
savings for the Series 2017 refunding is not all the District may realize due to the Series
2017 Refunding Bonds having a call feature on March 1, 2022, at no penalty. "If interest
rates are lower in 2022 or later, we can take advantage of that. Meanwhile we are locking in these levels that are more than one and three-quarters of a percent (1.75%) lower than they were in 2014," stated Mr. Collins. L. J. Hart & Company of St. Louis, Missouri prepared the refunding proposal and Dr. Roger Adamson, Vice President of the firm, explained how it can fit into the long range plans of the District. Dr. Adamson mentioned that the three significant factors making the Series 2017 refunding possible were the lower interest rates than in 2014, the fact that the $1,875,000 portion of the Series 2014 Bonds are subject to prepayment on March 1, 2019, at no penalty, and the District's ability to participate in the State of Missouri's Direct Deposit Program. This program makes it possible for the District to receive a "AA+" rating from Standard & Poor's Corporation on the refunding bonds. Dr. Adamson complimented Mr. Mayfield for his prompt and thorough preparations to supply the data necessary for the rating application and official statement, as well as the Board of Education for their foresight in making the Series 2014 Bonds callable in five years.
The Proceeds from the Series 2017 Refunding Bonds will be placed in an escrow
account with the UMB Bank, N.A. and reinvested in U.S. Treasury Securities. The earnings from this escrow account meet the interest payments On the Series 2017
Refunding Bonds through March 1, 2019, and prepay the callable Series 2014 Bonds on that date. The Series 2017 Refunding Bonds were underwritten by L.J. Hart & Company and reoffered to local financial institutions. Hawthorn Bank committed to purchase $120,000 of the bonds, which was helpful to the success of the financing according to L.J. Hart & Company. The closing for the Series 2017 Refunding Bond issue is to occur on May 10, 2017. Several board members commended Mr. Mayfield and L.J. Hart & Company for developing the attractive refunding plan. "It is nice to be able to save $346,238 of our taxpayers' money and boost our total savings since 1998 to $913,156," commented Tim Eastwood, Vice President of the Board of Education. The legal documents to complete the issuance of the bonds were prepared by Lori Lea Shelley, Esq. of Mickes O'Toole, LLC in its role as bond Counsel for the District.
