The underwriting due diligence period will culminate with approval of a school’s loan or possible rating and marketing of its bond issuance. Lenders may issue a commitment or approval letter resembling a detailed term sheet. Different refinancing sources and individual lenders within those sources have varying approval thresholds and credit approval procedures with different timing implications. Schools should discuss these thresholds and procedures with their lender to understand their impact on the refinancing timeline.
For tax-exempt bond issuances, a broker-dealer will work with the school and disclosure counsel (typically either bond counsel or underwriter’s counsel) to develop a preliminary official statement (POS) that will be used to market the offering to investors. Development of this offering document, which describes the bonds, their pricing, and their terms is a significant task. Schools will be required to provide significant disclosure in the Appendix B of the bond offering document, which describes the charter school’s history, governance and management structure, educational program, academic performance, and financial performance and projections. If a school is seeking a rating on its issuance, the municipal advisor and/or underwriting firm will assist in obtaining a rating for the bond issuance. Once the POS is drafted and rated, as applicable, the underwriting firm will make it publicly available to investors. After a marketing period of roughly two weeks, the underwriter will sell the bonds on a single day and determine the final interest rates, amortization structure, and pricing.
Related Articles in Undertsanding your Needs:
- Facility Refinancing: Preparation & Solicitation
- Assembling Your Facility Refinancing Team
- Facility Refinancing Guide to Underwriting
- Facility Refinancing Guide to Closing
- Facility Refinancing Guide to the Bond Market
- Facility Refinancing Guide to State Credit Enhancement
- Facility Refinancing Guide to Philanthropically-Enhanced Funds, Equitable Facilities Fund
- Facility Refinancing Guide to the CDFI Bond Guarantee Program
- Facility Refinancing Guide to Banks and Credit Unions
- Facility Refinancing Guide to Community Development Financial Institutions
- Facility Refinancing Guide to Philanthropically-Enhanced Funds, Facilities Investment Funds
- Facility Refinancing Guide to Replacement and Reporting
Legal Disclaimer:
Nothing in this material should be construed as investment, financial, brokerage, or legal advice. Moreover, the facts and circumstances relating to your particular project may result in material changes in the processes, outcomes, and expenses described herein. Consult with your own professional advisors, including your financial advisors, accountants, and attorneys, before attempting to consummate any transaction described in this material.
