HomeMy WebLinkAboutResolution No. 106-16 - RPU.SuppRes.ElectUtilRevenueBondSeries2016ACITY OF ROCHESTER
COUNTY OF OLMSTED
STATE OF MINNESOTA
RESOLUTION NO.
RESOLUTION SUPPLEMENTING THE RESOLUTION
AUTHORIZING THE SALE OF THE
CITY'S TEMPORARY SUBORDINATE ELECTRIC UTILITY REVENUE
BOND, SERIES 2016A
AND PROVIDING FOR THEIR ISSUANCE
A. WHEREAS, on December 21, 2015 the Common Council (the "Council") of the
City adopted Resolution No. 620-15 (the "Resolution") Authorizing the Sale of the City's
Temporary Subordinate Electric Utility Revenue Bond, Series 2016A (the "Bond") in order to
temporarily finance the Improvements as defined therein.
B. WHEREAS, offers to purchase the Bond were solicited on behalf of the City by
the City's municipal advisor, Springsted Incorporated.
C. WHEREAS, the terms of the Bond proposed by U.S. Bank National Association
(the "Purchaser") are as set forth in Exhibit A attached hereto (the "Terms").
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of
Rochester, Minnesota (the "City," which term, for purposes of this resolution, shall include the
Public Utility Board of Rochester Public Utilities), as follows:
1. Terms of Bond. The offer of the Purchaser to purchase the Bond in accordance
with the Terms is hereby accepted. The Terms as set forth in Exhibit A attached hereto are
hereby approved and incorporated by reference into the Resolution as more fully set forth in a
Continuing Covenant Agreement between the City and the Purchaser which is hereby approved
in substantially the form submitted. The approval hereby given to the Continuing Covenant
Agreement includes approval of such additional details therein as may be necessary and
appropriate and such modifications thereof, deletions therefrom and additions thereto as may be
necessary and appropriate and approved by the Pricing Committee in consultation with
Springsted and the City's bond counsel and by the officers authorized herein to execute said
documents prior to their execution; and said officers are hereby authorized to approve said
changes on behalf of the City. The execution of any instrument by the appropriate officers of the
City herein authorized shall be conclusive evidence of the approval of such document in
accordance with the terms hereof.
In the absence of the Mayor or City Clerk, any of the documents authorized by this
resolution to be executed may be executed by any duly designated acting official, or by such
other officer or officers of the City as, in the opinion of the City Attorney, may act in their
behalf.
466541v1 RC110-58
2. Amendment. The Resolution is hereby amended and supplemented to incorporate
and conform to the Terms (the "Resolution") and Section 1 of the Resolution is hereby amended
and restated to authorize issuance of the Bond in accordance with the Terms. Except as
specifically amended herein, the Resolution remains in full force and effect.
PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF
ROCHESTER, MINNESOTA, THIS DAY OF 2016.
ATTEST:
PRESIDENT OF SAID COMMON COUNCIL
CITY CLERK
APPROVED THIS DAY OF .2016.
MAYOR OF SAID CITY
466541v1 RC110-58
2,
CERTIFICATION
I, the undersigned City Clerk of the City of Rochester, Minnesota, do hereby certify the
following:
The foregoing is true and correct copy of a Resolution on file and of record in the offices
of the City, which Resolution relates to the supplementing the resolution of the City Authorizing
its Temporary Subordinate Electric Utility Revenue Bond, Series 2016A. Said Resolution was
duly adopted by the Rochester Common Council at a regular or special meeting of the Council
held on March 21, 2016. Said meeting was duly called and regularly held and was open to the
public and was held at the place at which meetings of the Council are regularly held, a quorum of
the Council being present and acting throughout. Councilmember moved the
adoption of the Resolution, which motion was seconded by Councilmember
. A vote being taken on the motion, the following members of the
Council voted in favor of the Resolution: President , Councilmembers
and the following voted against the same:
Whereupon said Resolution was declared duly passed and adopted. The Resolution is in
full force and, effect and no action has been taken by the Council which would in any way alter
or amend the Resolution.
WITNESS MY HAND officially as the City Clerk of the City of Rochester, Minnesota,
this day of , 2016.
(SEAL)
City Clerk
City of Rochester, Minnesota
466541v1 RC110-58
S-3
EXHIBIT A
Em
476252v2 RC110-62
DISCUSSION PURPOSES TERM SHEET
Rochester Public Utilities
U.S. BANK NATIONAL ASSOCIATION
TERM SHEET FOR REVOLVING CREDIT FACILITY
SUMMARY OF PRELIMINARY TERMS AND CONDITIONS
Date: January 20, 2016
ISSUER/OBLIGOR: Rochester Public Utilities ("RPU" or "Obligor")
FACILITY: Tax-exempt Draw Down Loan ("" or "Facility') to RPU to support ongoing
capital expenditures.
SECURITY: Payable from and secured by a pledge of and Lien on Net Revenues of the
Electric System, subordinate only to the Lien on Net Revenues securing Senior
Lien Bonds of the Obligor, as well as the proceeds from the issuance of any
subsequent long term bonds, whether senior lien or subordinate lien bonds.
BANK:
BANK RATINGS
PAR AMOUNT:
U.S. Bank National Association ("U.S. Bank" or the "Bank") or any subsidiary
or affiliate of the Bank.
Dec Al/P-1
2015
Up to $25,000,000.
FACILITY FEE AND TERMS:
FACILITY FEE AND
INTEREST ON
ADVANCES:
DOWNGRADE
PRICING:
Stable AA-/A-1+ Stable AA/F1+ Stable
The following terms and fees would apply to the Facility. All fees shall be paid
quarterly in arrears calculated on the basis of a 360 day year and actual days
elapsed.
Facility
Unused Facility Fee
Interest Rate on
Advances (Tax-
Term
per annum
exem t
28.0 basis points
70% of One Month
Draw Down
LIBOR + 38.0 basis
Loan.
points (Applicable
2 Years
Spread)
The above pricing is subject to the maintenance of the current ratings assigned
to the unenhanced long-term Senior Lien Bonds of the Obligor ("Bonds"). The
Term Sheet Page 1 of 9
DISCUSSION PURPOSES TERM SHEET
Rochester Public Utilities
a=
Facility Fee and Applicable Spread will be increased for each rating downgrade
of Bonds below the current ratings of "AA-" by Fitch or "Aa3" by Moody's as
applicable:
Moody's Fitch Facility Applicable
Level Rating Rating Fee Spread
Level 1
Aa3
AA-
28.0 bppa
38.0 bppa
Level 2
Al
A+
38.0 bppa
48.0 bppa
Level 3
A2
A
58.0 bppa
68.0 bppa
Level 4
A3
A-
98.0 bppa
108.0 bppa
If one or more of the ratings on the Bonds is withdrawn or suspended for credit
related reasons, or any such ratings shall fall below A3/A- (or its equivalent), or
there shall occur any other Event of Default, the Facility Fee shall increase by
an additional 300 basis points per annum from the fee otherwise in effect and
outstanding amounts under the Facility shall bear interest at the Default Rate.
In the event of a split rating the Facility Fee shall be based upon the lowest
rating. References above are to rating categories as presently determined by the
rating agencies, and in the event of the adoption of any new or changed rating
system or "global" rating scale by any such rating agency, the ratings categories
shall be adjusted accordingly to the new rating which most closely
approximates the ratings currently in effect.
TERM: The Scheduled Expiration Date of the Facility will be two (2) years from the
date of closing. All amounts outstanding under the Facility are due on the
Scheduled Expiration Date. Any amount outstanding beyond the Scheduled
Expiration Date shall bear interest at the Default Rate. The Scheduled
Expiration Date of the Facility will not be subject to extension without the
express written request of the Issuer and subsequent express written consent of
the Bank. See Renewal below.
DRAw FEE: None.
AMENDMENT FEE: $2,500 per Amendment plus reasonable legal fees.
OPTIONAL The Obligor has the right to prepay amounts outstanding under the Facility and
PREPAYMENT & Terminate the Facility at any time subject to the following. In the event the
TERMINATION FEE: Facility is terminated or reduced by the Issuer prior to the Nine month
anniversary of the date of closing, the Issuer shall pay to the Bank a termination
fee equal to the product of (i) the Applicable Spread in effect on the date of
such termination or reduction, (ii) the reduction in the par amount (iii) a
fraction, the numerator of which is the number of days from and including the
date of termination to and including the nine month anniversary of the date of
closing and the denominator of which is 360, provided that no such
Term Sheet Page 2 of 9
DISCUSSION PURPOSES TERM SHEET
Rochester Public Utilities
Termination Fee is payable if the reason for such termination or reduction is a
refinancing of the outstanding amount under the Facility with Senior Lien
Bonds not requiring or involving credit enhancement, liquidity facility or direct
purchase from a bank, financial institution or third party.
RENEWAL: At least 180 days prior to the expiration date of the Facility, the Issuer may
request an extension. The Bank will notify the Issuer if they will renew the
Facility, and on what terms and conditions, not less than 90 days before
expiration of the Facility. Such terms and conditions for any renewal would be
subject to mutual agreement between the Issuer and the Bank and any renewal
by the Bank will be at its sole and absolute discretion.
OTHER FEES AND EXPENSES:
BANK COUNSEL: Legal fees of Bank Counsel are estimated at $40,000 plus disbursements and
capped at $50,000 plus disbursements.
BANK'S OUT -OF None.
POCKET EXPENSES:
ADMINISTRATIVE None
FEES:
PAYMENT OF FEES AND EXPENSES:
(A) TIMING / All fees are non-refundable. Bank Counsel's fees and expenses and Bank's
COMPUTATION Out -of -Pocket Expenses are payable at closing in immediately available funds.
OF PAYMENTS: Additionally, Bank Counsel's fees and expenses and Bank's Out -of -Pocket
Expenses shall be paid by the Obligor regardless of whether the transaction is
closed. Any termination or reduction fee is payable on the date of such
termination or reduction, as applicable.
(B) FEES AND All fees and expenses, including those of Bank Counsel, are subject to increase
EXPENSES VALID if the transaction is not closed within 90 days from the date the Bank receives
FOR 90 DAYS: the mandate from the Obligor. In addition, the fees and expenses payable to
Bank Counsel may be increased if the security and/or structure of the
transaction changes materially once documentation has commenced.
INTEREST RATES:
DEFAULT RATE: Base Rate plus 3.0%
where Base Rate is the greatest of
Term Sheet Page 3 of 9
DISCUSSION PURPOSES TERM SHEET
Rochester Public Utilities
(i) Prime Rate plus 1.0%;
(ii) Federal Funds Rate plus 2.0%; and
(ill) 7.5%.
a=
(C) CLAWBACK The Credit Agreement will include customary interest rate recapture
AMOUNTS: ("clawback") language allowing the Bank to recover interest in excess of any
maximum interest rate imposed by law.
(D) INTEREST RATE Interest on amounts drawn under the Facility shall be calculated on the basis of
CALCULATION a 360 day year and the actual number of days elapsed and shall be payable
PROVISIONS: semi-annually on the first business day of March and September of each year
provided that Interest at the Default Rate shall be payable on a monthly basis on
the first business day of each month.
INCREASED COSTS AND CAPITAL ADEQUACY; TAXES:
DOCUMENTATION:
Standard increased costs, capital adequacy and tax provisions will be provided
for in final documentation, including Dodd -Frank and Basel III provisions.
Documentation will include the Credit Agreement prepared by Bank Counsel.
The Credit Agreement will include, but not be limited to, the terms and
conditions outlined herein as well as provisions that are customary and standard
with respect to conditions precedent, representations and warranties, covenants,
events of default and remedies (including acceleration of the Obligor's
obligations).
CONDITIONS PRECEDENT TO CLOSING:
Usual and customary for transactions of this nature, including, without limitation,
the following: all requisite approvals and incumbency certificates; delivery of all
required legal opinions including opinions of Bond Counsel in form and
substance satisfactory to the Bank; delivery of all applicable financing
documents; delivery of a certificate evidencing that no Default or Event of
Default shall have occurred and that all representations, warranties, and covenants
shall be true and correct; and payment of all closing fees and expenses.
Term Sheet Page 4 of 9
DISCUSSION PURPOSES TERM SHEET
Rochester Public Utilities
CONDITIONS TO EACH ADVANCE:
am
The Bank's obligation to fund advances under the Facility is subject to
satisfaction of conditions precedent, including the following:
1. The Bank's receipt of a Request for Advance not later than three (3) Business
Days prior to the related Advance Date;
2. The Bank's receipt of a certificate of the Obligor dated the related Advance
Date certifying that (i) no Default or Event of Default shall have occurred or
be continuing on such Advance Date and (ii) the representations and
warranties of the Obligor are true and correct in all material respects on such
Advance Date; and
3. Tax -exemption related conditions.
REPRESENTATIONS AND WARRANTIES:
COVENANTS:
Standard for facilities of this type, due authorization and organization; validity
and enforceability of transaction documents; accuracy of financial statements;
security; compliance with laws; accuracy of disclosure; no litigation; no default;
no usury restrictions; no margin stock; no proposed legal changes;
environmental matters; trustee; no immunity; and incorporation of
representations and warranties from Transaction Documents.
Standard covenants for facilities of this type, including but not limited to, the
following: performance of obligations under the transaction documents;
maintenance of status; further assurances; books and records; reporting
requirements; compliance with laws; restrictions on additional debt;
subordination of swap termination fees; restrictions on amendments to
transaction documents; incorporation of covenants from transaction documents;
maintenance of at least two unenhanced long-term ratings on Senior Lien
Bonds; notice requirements.
Rate Covenant: The Issuer shall be obligated under the Facility to establish
rates for service and collect charges in an amount which shall be sufficient, to
generate Net Revenues equal to at least 1.0 times maximum annual debt service
on all Bonds, other indebtedness and all obligations under this Facility. For the
purpose of this section annual debt service on the outstanding obligations under
this Facility shall be calculated assuming that the amount thereof shall be repaid
over a 30-year term having level debt service payment and bearing interest at
Term Sheet Page 5 of 9
DISCUSSION PURPOSES TERM SHEET
Rochester Public Utilities
the rate of 5.00% per annum.
a=
Additional Bonds Test: The Issuer shall be obligated under the Facility to
certify that rates and charges for service are sufficient to generate Net Revenues
equal to at least 1.15 times pro forma annual debt service on all Bonds, other
indebtedness represented by outstanding amounts plus maximum annual debt
service on Senior Bonds to be issued.
Other Credit Facilities: In the event that Obligor shall, directly or indirectly,
enter into or otherwise consent to any credit agreement, liquidity agreement or
other agreement or instrument (or any amendment, supplement or modification
thereto) under which, directly or indirectly, any Person or Persons undertakes to
make or provide funds for working capital purposes or to purchase Outstanding
Bonds or Parity and Junior Debt, which such agreement (or amendment thereto)
provides such Person with more restrictive or different covenants, more
restrictive or different events of default and/or greater rights and remedies than
are provided to the Bank under the Credit Agreement, Obligor shall provide the
Bank with a copy of each such agreement (or amendment thereto) and such
more restrictive or different covenants, more restrictive or different events of
default and/or greater rights and remedies shall automatically be deemed to be
incorporated into the Credit Agreement and the Bank shall have the benefits of
such more restrictive or different covenants, more restrictive or different events
of default and/or such greater rights and remedies as if specifically set forth
herein. Obligor shall promptly enter into an amendment to the Credit
Agreement to include such more restrictive or different covenants, more
restrictive or different events of default and/or greater rights or remedies
(provided that the Agent and the Lenders shall have and maintain the benefit of
such more restrictive or different covenants, more restrictive or different events
of default and/or greater rights and remedies even if Obligor fails to provide
such amendment).
EVENTS of Usual and customary for transactions of this nature, including, without
DEFAULT: limitation, the following: failure to pay any amount due under the Credit
Agreement, or on any debt that is secured on a senior basis to or on parity with
the obligations under the Facility; cross default with Senior Lien Bonds or
Parity Bonds other bank facilities; bankruptcy or insolvency (voluntary or
involuntary) of the Obligor; declaration of a moratorium with respect to any
indebtedness of the Obligor; material inaccuracy of any representation and
warranty; failure to comply with covenants following applicable grace periods,
if any; invalidity or contest of the Obligor's obligations under the Credit
Agreement; failure to pay final, non -appealable judgments in an amount,
singularly or collectively, of $10 million or greater; rating downgrade of
unenhanced long-term Senior Lien Bonds by any rating agency below the level
of "A3/A-", and suspension or withdrawal of any such rating by any rating
agency for credit related reasons.
Term Sheet Page 6 of 9
DISCUSSION PURPOSES TERM SHEET (Mbank.
Rochester Public Utilities
REMEDIES Usual and customary for transactions of this nature including but not limited to
immediate termination of the commitment of the Bank under the Credit
Agreement; declare any and all amounts outstanding under the Facility
immediately due and payable; exercise any other rights and remedies available
at law or in equity. Interest shall accrue daily at the Default Rate.
CHOICE OF LAW / JURY TRIAL / VENUE:
(A) GOVERNING The Credit Agreement and any other documents to which the Bank shall
LAw: become a party will be governed by the laws of the State of New York;
provided that the power and authority of the Obligor to execute, deliver and
perform its obligations under the Agreement will be governed by the laws of the
State of Minnesota.
(B) JURY TRIAL: The Obligor agrees, to the extent permitted under applicable law, to waive any
right to a trial by jury in any action or proceeding with respect to any dispute or
controversy under the Credit Agreement or Related Documents.
INDEMNIFICATION: Customary indemnification in all cases except where the Bank is proven to have
been guilty of gross negligence or willful misconduct.
ADDITIONAL TERMS: The terms and conditions contained in this proposal are not intended to be
comprehensive. The definitive transaction documents may include additional
terms and conditions required by the Bank, subject to mutual agreement of the
parties, which are not included herein.
CREDIT APPROVAL: Any commitment to enter into a Facility (including the terms and conditions
proposed herein) is subject to all of the Bank's internal approvals and due
diligence procedures. In obtaining credit approval, the Bank reserves the right
to modify and/or supplement any of the terms and conditions stated herein.
No ADVISORY OR The Obligor acknowledges and agrees that: (i) the Bank has not assumed any
FIDUCIARY advisory or fiduciary responsibility to the Obligor with respect to the
ROLE: transaction contemplated hereby and the discussions, undertakings and
procedures leading thereto (irrespective of whether the Bank or any of its
affiliates has provided other services or is currently providing other services to
the Obligor on other matters); (ii) the only obligations the Bank has to the
Obligor with respect to the transaction contemplated hereby are expressly set
forth in this term sheet; and (iii) the Obligor has consulted its own legal,
accounting, tax, financial and other advisors, as applicable, to the extent it has
deemed appropriate.
PROPOSAL Unless otherwise extended by the Bank, this proposal shall expire 90 days from
EXPIRATION: January 20, 2016.
Term Sheet Page 7 of 9
DISCUSSION PURPOSES TERM SHEET (Mbank.
Rochester Public Utilities
CONFIDENTIALITY: This Summary of Preliminary Terms and Conditions contains confidential and
proprietary structuring and pricing information. Except for disclosure on a
confidential basis to your accountants, attorneys and other professional advisors
retained by you in connection with the proposed transaction or as may be
required by law, the contents of this Summary of Preliminary Terms and
Conditions may not be disclosed in whole or in part to any other person or
entity without our prior written consent.
ADDRESS OF BANK: U.S. Bank National Association
461 Fifth Ave
15th floor
New York, NY 10017
BANK: Chris Jumper Bhala Mehendale
Tel: (917) 326-3925 Tel: (917) 326-3970
Fax: (917) 256-2830 Fax: (917) 256-2830
Email: Email: bhala.mehendaleCa�usbank.com
christopher.jumperCa�usbank.com
BANK COUNSEL:
Rick Cosgrove
Chapman and Cutler LLP
111 West Monroe Street
Chicago, Illinois 60603
Tel: 312.845.3738
Fax: 312.516.1938
cos rove ,chapman.com
NOTE: This proposal constitutes indicative terms for the described transaction for discussion only. The
attached proposal is subject to final credit approval and does not constitute an offer or commitment. As we
obtain more information, additional substantive conditions may be required and terms may be changed or be
supplemented. In addition, upon completion of our analysis and due diligence and if we obtain final credit
approval of this proposal, loan documentation must be created which will include terms and conditions
customary to the Bank, as well as warranties and covenants specific to this transaction. To that end, this term
sheet is an expression of interest only, and it is not a contract, commitment nor intent to be bound. The Bank
does not intend that this term sheet or discussions relative to the terms of this term sheet create any legal
rights or obligations, implicit or explicit, in favor of or against the other party. Also, no oral discussions
and/or written agreements shall be in place of or supersede written loan agreements executed by your
business and accepted by the Bank. Upon your acceptance of the terms and conditions contained within this
letter of interest, we will seek final credit approval to provide a Credit Facility for this transaction.
Term Sheet Page 8 of 9
DISCUSSION PURPOSES TERM SHEET
Rochester Public Utilities
AGREEMENT BY THE ISSUER / OBLIGOR:
am
The Obligor hereby agrees to engage the Bank to pursuant to the terms and
conditions stated herein.
Please evidence your acceptance of the foregoing by signing and returning a
copy of the document to the Bank.
ACCEPTED AND AGREED TO:
By: _
Date:
Term Sheet Page 9 of 9