02-03-2009, 07:09 PM
Email received from HPPOA today:
To All,
We are calling for a special BOD meeting on Wed. Febuary 11th at 5 PM in the HOA library .
Agenda
1) Paving specifications and bid proposals under consideration
2) Consideration of Dexia proposal as stated below
3) Executive session ( if needed) regarding contractual matters before the BOD
We will have Scott Marlin (financial advisor) who was our paid consultant during the bond consideration process at the meeting.
Good afternoon,
Due to the sharp decrease of interest rates in the monetary market since the rate cut by the FED on December 16, th ere may be an opportunity to modify the terms of Homeowners Assessment Revenue Bonds, Series 2007 in a way that will lead to the payment of a premium to HPPOA or a reduction of the current fixed interest rate.
The Series 2007 Bonds held by Dexia include a call-option that could be exercised on 01/01/2018 and any time thereafter, allowing HPPOA to call the Bonds at 102% of the Par on these dates.
This option has a significant value today. We roughly estimate that the up-front value of this option would be indicatively around $600,000 (or 5% of the Par Amount), as of today market's conditions.
The idea for HPPOA would be to amend the Bond Indenture for the series 2007 Bonds in a manner that will remove the call-option. This amendment will hence cause either the payment of an up-front premium to HPPOA by Dexia equivalent to the call-option's value (indicatively about 600,000 as of today market conditions), or a reduction of the current coupon (in a manner actuarially equivalent to the up-front premium).
We believe that this operation could be undertaken by simply amending the indenture. The amendment will remove the right for HPPOA to exercise the call-option in exchange for receiving an up-front premium or a reduction of the coupon. Therefore, the operation will NOT require undertaking any swap or option.
Should you find interest in this idea and would like to go forward, please do not hesitate to contact us.
To All,
We are calling for a special BOD meeting on Wed. Febuary 11th at 5 PM in the HOA library .
Agenda
1) Paving specifications and bid proposals under consideration
2) Consideration of Dexia proposal as stated below
3) Executive session ( if needed) regarding contractual matters before the BOD
We will have Scott Marlin (financial advisor) who was our paid consultant during the bond consideration process at the meeting.
Good afternoon,
Due to the sharp decrease of interest rates in the monetary market since the rate cut by the FED on December 16, th ere may be an opportunity to modify the terms of Homeowners Assessment Revenue Bonds, Series 2007 in a way that will lead to the payment of a premium to HPPOA or a reduction of the current fixed interest rate.
The Series 2007 Bonds held by Dexia include a call-option that could be exercised on 01/01/2018 and any time thereafter, allowing HPPOA to call the Bonds at 102% of the Par on these dates.
This option has a significant value today. We roughly estimate that the up-front value of this option would be indicatively around $600,000 (or 5% of the Par Amount), as of today market's conditions.
The idea for HPPOA would be to amend the Bond Indenture for the series 2007 Bonds in a manner that will remove the call-option. This amendment will hence cause either the payment of an up-front premium to HPPOA by Dexia equivalent to the call-option's value (indicatively about 600,000 as of today market conditions), or a reduction of the current coupon (in a manner actuarially equivalent to the up-front premium).
We believe that this operation could be undertaken by simply amending the indenture. The amendment will remove the right for HPPOA to exercise the call-option in exchange for receiving an up-front premium or a reduction of the coupon. Therefore, the operation will NOT require undertaking any swap or option.
Should you find interest in this idea and would like to go forward, please do not hesitate to contact us.
I don't know how I got over the hill without getting to the top.