Phoenix XXII: It's Now or Never

[OthmarAmmann]

Anyhoo, can one speculate that even 9% isn't going to get it done?

I'd be shocked if 9% didn't get it done. As Dado as pointed out, there is a lot of dumb money. The Illinois bonds that were issued last week and were also rated A1 received $6.1 billion in bids.

Also, the number Hulsizer mentioned ($100 million in additional interest) seems high. I backed into the principal repayments from the preliminary debt service schedule in the OM, and you need to bring about 9% down to about 5% to get that kind of saving. The principal repayments are pushed out pretty far. Payments don't seem to start until 2020, when about $2 million is repaid, and rise to about $8 to $9 million by 2041. It would seem very unlikely that they'll go for 5% on average given that kind of maturity. The Illinois bonds went for 5.9% and matured no later than 2019, and interest rates have risen in that time due to the Middle East stuff.

 

[davemac1313]

I'd be shocked if 9% didn't get it done. As Dado as pointed out, there is a lot of dumb money. The Illinois bonds that were issued last week and were also rated A1 received $6.1 billion in bids.

Also, the number Hulsizer mentioned ($100 million in additional interest) seems high. I backed into the principal repayments from the preliminary debt service schedule in the OM, and you need to bring about 9% down to about 5% to get that kind of saving. The principal repayments are pushed out pretty far. Payments don't seem to start until 2020, when about $2 million is repaid, and rise to about $8 to $9 million by 2041. It would seem very unlikely that they'll go for 5% on average given that kind of maturity. The Illinois bonds went for 5.9% and matured no later than 2019, and interest rates have risen in that time due to the Middle East stuff.

could you expand on the second paragraph? Not sure I understand what you are saying.

Thanks

 

[OthmarAmmann]

could you expand on the second paragraph? Not sure I understand what you are saying.

Thanks

Sorry.

The bond offering memo has a schedule of payments on the bonds (see Table 5 on page 23). For the 2011A bonds, those payments include both principle and interest, and total $280.4 million. Since the bonds only have a face of $107 million, that means the total interest is $173.4 million. An IRR shows the bonds pay about 6.8% annual effective on average (each bond will have it's own interest rate)

The cashflow for the 2011A bonds does not change until 2020, which means that the principle is not being paid down and the debt service is completely interest on the outstanding debt. You can back into the principle payments from there, and then figure out the total interest at different rates using those principle payments. In order to reduce the total interest payments from $173 million to about $73 million is to assume a rate of 3%, which is simply not going to happen. At 9% interest the total interest is about $210 million and at 5% it's about $115 million. The point is that a legal challenge couldn't change the rates enough to increase interest costs by $100 million (unless they pushed them over 9% I guess).

Given the Illinois bonds that were issued last week, which had the same rating but matured much earlier, the rate is not likely to be less than 5.9%. Bonds that mature later have to pay higher interest. For example, a US Treasury bond that matures in 30 years currently has an interest rate 1.2% higher than a US Treasury bond that matures in 10 years.

edit: they could also save about $40 million in interest by paying off the debt in equal installments every year instead of pushing it out 20+ years from now.

 

[PitbulI]

I'll be honest. Like many Winnipeggers who want the NHL back, we don't care about the taxpayers in Glendale. Since the Coyotes fans are now attacking us, I thought I'd clear the air with that. We point out issues with the lease and deal to wonder how on earth anyone could make a deal in which the COG is doing.

MH doesn't care about the Coyotes. If he did, he'd get some people together and put more than 70 million into the team. At least pay for the whole team and take the management fee to pay for the losses which he is doing.

As for the bankruptcy thing. I received an email reply from Leiberman (I know, he's anti deal) but he stated that the way MH has it setup, technically the company which will own the Coyotes can go bankrupt at any time he chooses. Peak6 nor MH is the owner but a company name created.

 

[Brodie]

so is this any closer to being done one way or another

 

[davemac1313]

thanks, no expert here on any bonds, certainly not muni bonds etc, appreciate the "dumbed down" version for us lay people. So if I understand what you are saying, the bond offering was at 6.8? initially and that now it must be much higher if the MH comment says it is 100 million more or is the 100 the difference between best case 5% and whatever they are at now?

 

[Confucius]

so is this any closer to being done one way or another

Nope and so another day with no positive news goes by and the clock moves to 11:45

 

[MAROONSRoad]

From Phoenix Business Journal:

Hulsizer says he’s ready to close on the Coyotes purchase and wants Goldwater to drop its lawsuit threat to bring the interest rate down and save Glendale money.

But Olsen isn’t ready to do that.

“Moody’s and S&P both already downgraded Glendale’s general bonds due to excessively high levels of debt. Any investor with a head on his shoulders should be nervous about buying bonds to back a corporate subsidy that appears to be an illegal deal in violation of the Arizona Constitution,†Olsen said pointing to recent actions by bond rating firms.

She also said Glendale “dragged its feet†in turning over documents related to its various Coyotes dealings. “We are not in any hurry and continue waiting on yet more documents. In the meantime, Glendale has the opportunity to spare taxpayers a protracted legal battle and follow the law of its own accord,†Olsen said.

http://www.bizjournals.com/phoenix/news/2011/02/28/hulsizer-goldwater-spar-on-coyotes.html?ana=twt

From GWI:

A financial consultant used by Glendale, Ariz., to justify the city’s $197 million plan to keep the Phoenix Coyotes is accused of helping to defraud investors in a separate deal by producing overly optimistic revenue projections for a hockey arena in Prescott Valley, Ariz., according to a federal lawsuit.

Thomas Hocking and his company, TL Hocking & Associates, produced inflated revenue projections to secure financing for the 5,000-seat arena in Prescott Valley, according to the lawsuit filed in 2009 by investors who bought the $35 million in government bonds that paid for the project. The suit was filed after the arena failed to produce enough revenue to repay the debt, leading the bonds to be downgraded to junk status.

Hocking would not answer questions about the lawsuit or his work for Glendale when contacted by the Goldwater Institute.

http://goldwaterinstitute.org/article/5741

GHOST

 

[cbcwpg]

From GWI:

http://goldwaterinstitute.org/article/5741

GHOST

I like these comments:

Hocking would not comment when contacted by the Goldwater Institute, which sent him a list of questions related to his analysis of the Coyotes deal, the allegations raised in the Prescott Valley lawsuit, and his relationship with Global. He did say in an e-mail response that “the Goldwater Institute has made false and damaging statements about me and TL Hocking & Associates to which I take great offense,†an apparent reference to a statement on Feb. 10, 2011, from the Goldwater Institute which mentions the Prescott Valley arena lawsuit.

“The Goldwater Institute does not appear to be interested in or truly wants to understand the Glendale or Prescott Valley projects, but rather seems to be more interested in further damaging my reputation,†Hocking wrote in response to repeated requests for an interview made both by phone and e-mail.

So the GWI is trying to get answers to thier questions about the parking study that Hocking did ( and maybe even agree with it at the end of the day ) , yet Hocking won't answer the questions. That's gonna help the CoG position. So is Hocking going to the sue the GWI for damages? This keeps getting better.

 

[goyotes]

From Phoenix Business Journal:



http://www.bizjournals.com/phoenix/news/2011/02/28/hulsizer-goldwater-spar-on-coyotes.html?ana=twt

From GWI:



http://goldwaterinstitute.org/article/5741

GHOST

The GWI is really behind on things, which makes me wonder if I gave them too much credit and if they even know as much about this deal as the posters on the board. Glad to see they did a smear article about a company that issued a report that ultimately wasn't even used by the CoG and isn't part of the bond offering. Anyone following this deal, even people on this board, know this is a red herring. Why doesn't the GWI go after CBRE? This is more PR by the GWI, who will not sue this out. They are looking to mudsling rather than to actually evaluate the deal and act responsibly.

I can only hope that the CoG lawyers have told the GWI that as soon as the bonds sell for a higher interest rate, they are bringing suit against the GWI for contractual interference. The only problem with that is both the CoG and the GWI know that a judgment against the GWI is uncollectable, and the GWI will just close up shop and misappropirate the good name of some other poor statesman.

 

[AllByDesign]

She also said Glendale “dragged its feet†in turning over documents related to its various Coyotes dealings. “We are not in any hurry and continue waiting on yet more documents. In the meantime, Glendale has the opportunity to spare taxpayers a protracted legal battle and follow the law of its own accord,†Olsen said.

Any doubt of their intent now?

 

[goyotes]

I'll be honest. Like many Winnipeggers who want the NHL back, we don't care about the taxpayers in Glendale.

I can appreciate the honesty. And to be honest, I am not surprised to hear that. So let's get over the pretense of whether this deal is the best of no real good alternatives for the CoG. Again, Phoenix bad....Winnipeg good. Got that point about 20 threads ago.

 

[Jesus Christ Horburn]

Any doubt of their intent now?

Checkmate.

COG has no moves left to make.

 

[goyotes]

Any doubt of their intent now?

Yes. I do question their intent. It seems they have reached some conclusion about the legality of the transaction, yet they aren't going to act upon it and plan to allow the bonds to be sold at an interest rate the will harm the taxpayer. It seems the GWI is playing games here.

 

[Fugu]

As an aside, since the boards crashed a few times today...

HF smashed to utter smithereens all previous 'number of users currently online' record. We broke our old record mid-month, and then smashed that one by a factor of 3x today.

Seems everyone found their way back.

 

[cbcwpg]

I can only hope that the CoG lawyers have told the GWI that as soon as the bonds sell for a higher interest rate, they are bringing suit against the GWI for contractual interference.

Why? Do you actually think you personnally will see any benefit from the CoG taking the GWI to court?

The only thing the CoG's lawyers have done so far is give the GWI a 24 hour ultimatium that meant nothing.

The only problem with that is both the CoG and the GWI know that a judgment against the GWI is uncollectable, and the GWI will just close up shop and misappropirate the good name of some other poor statesman.

If you admit it is uncollectable they why would the CoG waste taxpayers money suing the GWI, since you are all about saving taxpayers dollars? The GWI has lost many a case and are still around, so I would say they are not going anywhere win or lose.

 

[gollybass]

Yes. I do question their intent. It seems they have reached some conclusion about the legality of the transaction, yet they aren't going to act upon it and plan to allow the bonds to be sold at an interest rate the will harm the taxpayer. It seems the GWI is playing games here.

Seems like their intent is to cost the Glendale taxpayer further money

 

[Fugu]

Yes. I do question their intent. It seems they have reached some conclusion about the legality of the transaction, yet they aren't going to act upon it and plan to allow the bonds to be sold at an interest rate the will harm the taxpayer. It seems the GWI is playing games here.

Seriously? Even MH conceded that CoG dragged their feet in disclosing all relevant documents to GWI.

You're getting into interesting territory by claiming their intent is to drive up the bond price. I believe their intent is to prevent Glendale from violating Arizona's Constitution. Perhaps you have better information?

Edit: I'm also under the impression that only Glendale can allow any bond sale to move forward. They are hardly the victim you pain them in this process, and there is a constitution in Arizona. Perhaps your quibble is with that document.

 

[MAROONSRoad]

They are hardly the victim you pain them in this process, and there is a constitution in Arizona. Perhaps your quibble is with that document.

Wasn't it George W. that once stated of the U.S. Constitution, "It's just a G.D. piece of paper!"

GHOST

 

[Fugu]

http://hfboards.com/showthread.php?t=884371

Closed.

The other thread is open even if it looks closed. Servers aren't keeping up with updating the indices..