Important OCS Update

[Triple B]

10 hours ago, Brad said:

And this scenario is critical.  It’s BS to pretend otherwise,  IMHO opinion and with respect to others.  

I resemble that remark, but do have a little better understanding of where you're coming from with all that high falootin' financial stuff ...... just don't think things have changed that drastically, for us yet, since the process started. again, though, don't really know how the decision making goes with these bond things.

 

[Jim Johnson]

10 hours ago, Brad said:

$200 milion in a debt instrument.  Debt can be in bond issues or some type of a loan.  A $200 million bank loan would be crazy.  If that’s the case, that USF got a fixed rate on a long term $200 million dollar loan, that would be spectacular and probably a participation loan. 

It's a $200 million loan from Truist.

From the agenda of the USF Board of Trustees meeting in June:

Financing Structure:

The Project will be financed with 20-year, fixed rate, taxable debt issued by the USF Financing Corporation (“DSO”) in an amount equal$200M, inclusive of estimated cost of issuance ($500k); together with an equity contribution equal to $140M from the University.

The Debt to be issued by the DSO, will be in the form of a bank loan. On October 5, 2022, the DSO issued an Invitation to Negotiate ("ITN")for the financing of the Project, contemplating a borrowing by the DSO to finance a portion of the costs of the Project. The DSO received three responses to the ITN. The bank that best met the needs of the DSO to finance the Project, Truist Bank (“Truist”), was awarded the opportunity to further negotiate with the DSO to provide financing for the Project to the DSO through a bank loan. A negotiated private placement with Truist is necessary to reduce the cost of financing by entering into a loan agreement with Truist instead of issuing bonds in the public market.

The debt will bear interest at a rate acceptable to the DSO. Truist provided an indicative 20-year taxable rate of 5.31%. For the purpose of projections, debt service coverage is based on the taxable fixed interest rate of 5.50%.

 

[Brad]

That's good stuff there, Jim. 

So, it is debt issued by the DSO as suspected and hence they back the loan with?   The good faith of the University?  That's a limiter of risk..

It will be interesting to see if the rate changes between now and the transaction.   If I'm the I investor (Truist), the landscape is changing to include additional risk to future cash flows which will cause upward movement in the indicative rate.  Just as membership in the Big Ten would drive down the risk and cost, substantially.

Risk still applies here and we do not have a fixed, locked in cost of capital.

 

 

 

[Triple B]

13 minutes ago, Jim Johnson said:

It's a $200 million loan from Truist.

From the agenda of the USF Board of Trustees meeting in June:

Financing Structure:

The Project will be financed with 20-year, fixed rate, taxable debt issued by the USF Financing Corporation (“DSO”) in an amount equal$200M, inclusive of estimated cost of issuance ($500k); together with an equity contribution equal to $140M from the University.

The Debt to be issued by the DSO, will be in the form of a bank loan. On October 5, 2022, the DSO issued an Invitation to Negotiate ("ITN")for the financing of the Project, contemplating a borrowing by the DSO to finance a portion of the costs of the Project. The DSO received three responses to the ITN. The bank that best met the needs of the DSO to finance the Project, Truist Bank (“Truist”), was awarded the opportunity to further negotiate with the DSO to provide financing for the Project to the DSO through a bank loan. A negotiated private placement with Truist is necessary to reduce the cost of financing by entering into a loan agreement with Truist instead of issuing bonds in the public market.

The debt will bear interest at a rate acceptable to the DSO. Truist provided an indicative 20-year taxable rate of 5.31%. For the purpose of projections, debt service coverage is based on the taxable fixed interest rate of 5.50%.

 

So, assuming that's accurate, we don't have to worry about some stuffed shirts whimsically factoring in the uncertainty of the overall college football landscape to issue bond(s), then?

[Cat941]

1 minute ago, Triple B said:

So, assuming that's accurate, we don't have to worry about some stuffed shirts whimsically factoring in the uncertainty of the overall college football landscape to issue bond(s), then?

Nice to hear.  

[Brad]

29 minutes ago, Triple B said:

So, assuming that's accurate, we don't have to worry about some stuffed shirts whimsically factoring in the uncertainty of the overall college football landscape to issue bond(s), then?

No, you only have to worry about Truist and the cost and viability of that future transaction..

 

[Bull Matrix]

1 hour ago, Brad said:

That's good stuff there, Jim. 

So, it is debt issued by the DSO as suspected and hence they back the loan with?   The good faith of the University?  That's a limiter of risk..

It will be interesting to see if the rate changes between now and the transaction.   If I'm the I investor (Truist), the landscape is changing to include additional risk to future cash flows which will cause upward movement in the indicative rate.  Just as membership in the Big Ten would drive down the risk and cost, substantially.

Risk still applies here and we do not have a fixed, locked in cost of capital.

 

 

 

I am wondering what they know and others don’t?? Seems all too calm going on at USF which hopefully is a good thing.

[Brad]

We’ve been calm for at least the last 15 years. 

[Bull Matrix]

3 minutes ago, Brad said:

We’ve been calm for at least the last 15 years. 

Lol well yeah basically. The only time I remember USF lashing out was when Weatherford was telling everyone that USF is moving forward with the OCS. That caused a lot of reactions. 

[belgianbull]

I just hope with all the recent changes in the college football landscape that we wont scale back our OCS plans. If anything we should double down on building the best stadium that we can. Nothing should have changed in that respect.