Proposed refinance would fund projects in Opp
Published 12:31 am Wednesday, January 7, 2015
A proposed refinancing of a portion of Opp’s $21 million outstanding bond debt could give the city cash with which to finance capital improvement projects.
The Opp City Council on Monday approved a resolution engaging Merchant Capital, a Montgomery underwriter, and Maynard Cooper and Gale, P.C., as bond counsel, for the proposed Series 2015 Warrants.
Mayor John Bartholomew called the proposed financial transactions offer the city a “huge opportunity.”
Ken Funderburk of Merchant Capital told council members approval of the resolution would in no way obligate the city to move forward on the transaction until a later time.
“We will put together the documents, the deal, come back to this body again, present our final numbers and issues at that point and this body will have an approval process to go through,” Funderburk said. “This resolution merely sets in move the wheels towards getting a transaction done.”
Bartholomew said the interest rate could be reduced from from 4.44 percent to 3.32 percent, creating savings in interest.
The deal would include using $2 million from the sale of the city’s cable system to Andy Cable to pay against the city’s indebtedness on the system, which was estimated at $496,368 in a report from Merchant Capital. If the bonds are refinanced at the current interest rate, it is estimated the city would have $1.5 million in proceeds for capital improvement projects.
“This would create a savings for the city that we can use for capital expenditures,” Bartholomew said. “It will help with everything in the city. “We have prospects coming into the city and we have infrastructure to expand,” he said. “This will be helping the city grow and be giving back to the community. Our city is rapidly growing and this just gives us money to do these things.”
Many other cities are taking advantage of the current low interest rates, Bartholomew said.
When Funderburk originally proposed the plan more than a month ago, the interest rate only allowed for a $250,000 savings. The interest rate dropped making it possible for the current $377,000 savings, but could quickly change again.
“We’re hoping and praying it stays low like this,” Bartholomew said. “It can be a great benefit to the city. If you don’t do this, you’re hurting the city. It’s a huge opportunity. It’s really important to do these things for money for the city.”
The council unanimously approved the resolution and a possible proposal may be available in February, Bartholomew said.