Case Study
New York Power Authority
PFM is very proud to have been retained by the New York Power Authority (NYPA) to undertake an extremely comprehensive approach to financial advisory services in one of the most complicated municipal debt restructurings ever undertaken. In this capacity, PFM devised the overall debt strategy, analyzed the tax consequences of the various bond issues, assisted NYPA in the selection of the underwriting team, determined the division of responsibility among the syndicate participants, organized and coordinated a world-wide investor tour, developed and led rating agency presentations, coordinated all aspects of the six separate transactions, verified the pricing on the bonds and assisted with the investment of the proceeds of the bond sales.
As the New York Power Authority began grappling with a future in a deregulated environment, it became clear that the 1974 Bond Resolution under which it operated did not give NYPA the flexibility it needed now. For example, it provided for various bondholder protections such as coverage requirements, additional bond tests and strict segregation of funds, reflecting a regulatory environment that permitted complete asset cost recovery. Given the deregulation of the electric utility industry and the need for municipal power entities to compete with investor owned utilities, such bondholder protections now seem onerous. Complicating matters further was the imminent change in tax status for several series of NYPA bonds due to a change of use in the projects financed by these bonds. PFM, being the nation's leading financial advisor and having extensive expertise on public power issues, was able to look at these challenges and structure a complex series of transactions that will meet NYPA's needs as it begins to operate in a deregulated environment.
PFM had primary responsibility for developing and executing the plans of finance for all of these transactions including: identifying refunding candidates; properly allocating available moneys; structuring, bidding and allocating each refunding escrow; structuring refunding securities; overseeing the creation of the legal framework for the transactions; and negotiating all underwriting and remarketing fees, as well as liquidity facility fees.