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Denver Schools Facilities Leasing series 2008B-1 COP holders may want to tender ahead of rate reset
By Angela McDaniels
Tacoma, Wash., Feb. 9 - School District No. 1 in the City and County of Denver and State of Colorado warned that holders of Denver Schools Facilities Leasing Corp.'s $200 million series 2008B-1 taxable variable-rate certificates of participation may want to tender their holdings soon because the interest rate on the COPs could be reset to a "substantially" lower rate as early as next week.
The COPs were issued in the weekly rate mode, and the weekly rate is determined by remarketing agent RBC Capital Markets Corp.
While the COPs bear interest in the weekly rate mode, holders may tender their COPs at par plus accrued interest on any business day. The purchase price of a COP that is tendered but not remarketed is payable from funds drawn under the issuer's 2008B standby certificate purchase agreement with Dexia Credit Local.
The district said disruptions in the markets for taxable variable-rate demand obligations have impacted the weekly rates for the COPs and there have been draws on this facility since Sept. 24.
In an effort to reduce its interest expense for the COPs, the district is attempting to identify potential purchasers of the COPs. RBC Capital Markets has received notice that an entity is interested in purchasing them at an interest rate that it said is substantially lower than the 5% weekly rate set on Feb. 4.
If RBC Capital Markets determines that this rate is the lowest rate necessary to remarket all of the COPs at par, it would be required to set that rate as the weekly rate on the COPs, and such a reset could occur as soon as Feb. 18.
COP holders who wish to tender before Feb. 18 must deliver notice no later than Wednesday.
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