san antonio water system 2001 underwriting pool resolution

8/9/2019 San Antonio Water System 2001 Underwriting Pool Resolution

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AGENDA ITEM NO. ~TO: . San Antonio Water System Board of TrusteesFROM: Eugene E. Habiger, General, USAF (Ret.), PresidentiChiefExecutive OfficerSUBJECT: APPOINTMENT OF A POOL OF BOND UNERWRTING FIRS

Board Action Date: June 12,2001SUMMARY AND RECOMMENDATION:The attached resolution appoints a pool of bond underwting firms to assist the System inrestructurig its currently outstanding bonded debt and in financing its proposed capitalimprovement programs.. The System currently has $728,455,000 .of long term, fixed rate debt outstanding.Schedule 1 depicts the annual principal and interest requirements for this debt untilmaturity.. The Series 1992 bonds, which total $292,020,000 or 40% of the amount outstanding,become callable on May 15,2002.. The callability of these bonds plus the current favorable interest rate markets providean opportunity to restructure the System's outstanding debt in anticipation offinancing the projected capital program requirements over the next ten years of over

$2 bilion. Schedule 2 depicts the projected capital improvement programs for thisperiod oftime by core business.. Preliminary analyses indicate that the restructuring would result in a present valuesavings to the System.. Appointment of the pool of underwriting firms at this time would allow forcompletion of a transaction as early as September, 2001 should changes in the creditmarkets dictate. .. The standard process of requesting and evaluating proposals based on experienceand qualifications using the System's decision analysis tool was utilized. Firmswere categorized based on their designation as national, regional, or SMWBE. TheContracting Department was informed of this process and observed the proposalevaluation meeting.


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Appointment of a Pool of Bond Underwting Firms Agenda Item No. 33Page 2 -

. Based on the results of the evaluation process, the following pool of underwritingfirms is recommended:National FirmsA.G. Edwards & Sons, Inc.Bear Stears & Co., Inc.Goldman Sachs & Co.JPMorgan Chase & Co.Morgan Stanley & Co. IncorporatedSalomon Smith Barey, Inc.

Regional Firms .Dain Rauscher, IncorporatedM.E. Allson & Co. Inc.Morgan Keegan & Company, Inc.Southwest Securities, Inc.

SMWBE FirmsApex Pryor SecurtiesSamuel A. Ramirez & Co., Inc.Siebert Brandford Shan & Co., L.L.C.Southwestern Capital Markets, Inc.. The recommended pool consists of foureen firms. The specific syndicate foreach individual transaction would consist of eight to twelve firms, dependingupon the size and complexity of each transaction.. Oral interviews would be conducted prior to each transaction to determine

the firm best suited to serve in the role of senior manager.. Following designation of the senior manager and formulation of a plan offinance, including sizing and structure recommendations, other members ofthe specific syndicate would be formulated. Each syndicate would reflect a

balance of national, regional, and SMWBE firms.. Inclusion as a member of subsequent syndicates would take intoconsideration a firm's performance on previous transactions. A minimal ornon-performing firm would be subject to removal from the pool.. Firms not par of the initial pool recommended above, may be considered forfuture inclusion based on interest in providing service to the System, as maybe evidenced by submission of timely and meaningful reports and analyses.


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Appointment of a Pool of Bond Underwriting Firms Agenda Item No.Page 3

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. Based on the result of oral interviews conducted May 30 with the six nationalfirms, Salomon Smith Barney, Inc. is recommended to serve in the capacityas senior manager on the initial transaction. Salomon Smith Barey, Inc. isrecommended for this role due to their superior approach and strategy torestructuring the System's outstanding debt and plan of finance to address theSystem's capital improvement needs over the next several years.

The Management Services Committee was briefed on the approach and calendar of eventsfor this matter.Staff recommends approval of the attached resolution.FINANCIAL IMP ACT:The appointment of the pool 'of underwriting firms creates no immediate contractual orfinancial obligation to the System.Once the size and structure of the bond issue is finalized and a sale date is determined, apurchase agreement wil be negotiated with the senior manager. Based on recent experiencein the market place estimated underwriting fees could range from $4.50 to $6.00 per bond.SUPPLEMENTARY COMMENTS:The System's co-financial advisory team of Estrada Hinojosa and First Southwest .assistedstaff in the formulation of this recommendation, with Estrada Hinojosa serving in the leadrole.Requests For Proposals were distributed May 8, 2001.Nineteen proposals were received by the due date of May 18,2001.The proposals were evaluated by thee staff members from SAWS, two representatives fromEstrada Hinojosa, and one representative from First Southwest.The City's Public Utilities Supervisor was apprised and informed of this process andrecommendation.


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Appointment of a Pool of Bond Underwting Finns Agenda Item No. ~Page 4

APPROVED:

Eugene E. Habiger,~ General, USAF (Ret.).r- PresidentiChiefExecutive Offcer


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RESOLUTION NO. 01.-171'OF THE SAN ANTONIO WATER SYSTEM BOAR OFTRUSTEES APPOINTING A POOL OF UNDERWRITINGFIRMS CONSISTING OF A.G. EDWARS & SONS, INC., APEXPRYOR SECURITIES, BEAR STEARS & CO., INC., DAINRAUSCHER, INCORPORATED, GOLDMAN SACHS & CO.,JPMORGAN CHASE & CO., M. E. ALLISON & CO., INC.,MORGAN KEEGAN & COMPANY, INC., MORGAN STANLEY& CO., INCORPORATED, SAMUEL A. RAREZ & CO., INC.,SALOMON SMITH BAREY, INC., SIEBERT BRAFORDSHANK & CO. L.L.C., SOUTHWEST SECURITIES, INC., ANDSOUTHWESTERN CAPITAL MARTS, INC. TO ASSIST THESYSTEM IN THE RESTRUCTURING OF ITS CURRNTLYOUTSTANDING BONDED DEBT AND PROVIDINGFINANCING FOR FUTURE CAPITAL IMPROVEMENTPROGRAS; DESIGNATING SALOMON SMITH BAREY,INC., IN THE ROLE OF SENIOR MANAGER FOR THEINITIAL. TRASACTION CONDUCTED; DIRECTING THEPRESIDENT/CHIEF EXECUTIVE OFFICER TO DEVELOP ASET OF PROCEDURES FOR MAAGEMENT ANDADMINISTRATION OF THE POOL; FINDING THERESOLUTION TO HAVE BEEN CONSIDERED PURSUANT TOTHE LAWS GOVERNING OPEN MEETINGS; PROVIDING ASEVERABILITY CLAUSE; AND ESTABLISHING ANEFFECTIVE DATEWHEREAS, San Antonio Water System (the "System") monitors itsoutstanding debt and investigates opportunities to manage this debt in an effective andeffcient maner; andWHEREAS, current interest rate conditions and projected capital improvementneeds make it advantageous and prudent for the System to consider a restructurng of itscurrently outstanding debt; andWHEREAS, in order to proceed in a timely fashion with such restructuring andfinancing for capital improvements, a pool of underwriting firms needs to be appointed toassist in the strcturing, marketing, and sale of debt; andWHEREAS, the System's standard process for solicitation and evaluation ofproposals for professional services has been completed; and'WHEREAS, oral interviews have been conducted as a basis for designating oneof the underwriting firms to serve in the role as senior manager of the initial transactionto be completed; and


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01.- 171WHEREAS, guidance is necessary to provide an orderly process for

maintaining a quality and effective pool of underwting firms; andWHEREAS, the San Antonio Water System Board of Trustees desires to (i)appoint a pool of underwriting firms consisting of AG. Edwards & Sons, Inc., ApexPryor Securities, Bear Stears & Co., Inc., Dain Rauscher, Incorporated, Goldman Sachs& Co., JPMorgan Chase & Co., M. E. Allson & Co., Inc., Morgan Keegan & Company,Inc., Morgan Stanley & Co., Incorporated, Samuel A Ramirez & Co., Inc., SalomonSmith Barey, Inc., Siebert Brandford Shan & Co. L.L.C., Southwest Securties, Inc.,and Southwestern Capital Markets, Inc. to assist the System in the restructurng of itscurrently outstanding bonded debt and providing financing" for futue capitalimprovement programs, (ii) designate Salomon Smith Barey, Inc., in the role of seniormanager for the initial transactions conducted, (iii) direct the President/Chief ExecutiveOffcer to develop a set of procedures outlining management and administration of theunderwriter pool; now therefore:BE IT RESOLVED BY THE SAN ANTONIO WATER SYSTEM BOAR OFTRUSTEES:

1. That the following firms are hereby appointed to serve as the pool of underwritingfirms to assist the System from time to time in the issuance of debt:AG. Edwards & Sons, Inc.Apex Pryor SecuritiesBear Steams & Co., Inc.Dain Rauscher, Incorporated.Goldman Sachs & Co.JPMorgan Chase & Co.M. E. Allison & Co., Inc.Morgan Keegan & Company, Inc.Morgan Stanley & Co., IncorporatedSamuel A Ramirez & Co., Inc.Salomon Smith Barey, Inc.Siebert Brandford Shan & Co. L.L.C.Southwest Securities, Inc.Southwestern Capital Markets, Inc.

2. That Salomon Smith Barey, Inc., is hereby designated to serve in the role ofsenior manager for the initial debt offering related to the restrctung of existing debtand financing for capital improvements of the System.3. That the President/Chief Executive Offcer is hereby directed to develop a set ofprocedures outlining management and administration of the underwriter pool, includingat a minimum provision for designation to serve as senior manager based on anevaluation process to be conducted for each transaction, provision for the rotation ofunderwting syndicate members, evaluation of the performance of syndicate members,


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~ 01-171provision for the substitution of minimal or non-performing syndicate members, andprovision for recommending to the Board inclusion of underwriting firms not originallypart of the pool based on submission of timely and meangful debt reports and analyses.4. It is officially found, determined and declared that the meeting at which thisresolution is adopted was open to the public, and that public notice of the time, place andsubject matter of the public business to be conducted at such meeting, including thisresolution, was given to all as required by the Texas Codes Anotated, as amended, Title5, Chapter 551 Governent Code.5. If any part, section, paragraph, sentence, phrase or word of this resolution is forany reason held to be unconstitutional, ilegal, inoperative or invalid, or if any exceptionto our limitation upon any general provision herein contained is held to beunconstitutional, ilegal, invalid or ineffective, the remainder of this resolution shallnevertheless startd effective and valid as if it had been enacted without the portion held tobe unconstitutional, ilegal, invalid or ineffective.6. This resolution becomes effective immediately upon its passage.

PASSED AN APPROVED ths the 12th day ofJune 2001.

~~es M. Mayor, hairmanATTEST:J.~

san antonio water system 2001 underwriting pool resolution

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