Client Profile: The Xaverian Brothers established Our Lady
of Good Counsel in 1958 as a Catholic high school for boys. In 1988, Good
Counsel became a co-educational institution, serving a diverse range of
students throughout the Washington D.C. Metropolitan Area.
Project Overview:
Since its founding in 1958, the School
operated out of facilities located on Georgia Avenue in Wheaton,
Maryland. Its facilities were beginning to show their age and the
School needed new and
expanded athletic fields and facilities to remain competitive. In
2002,
the School was approached by Centex Corporation and W.L. Homes major
real
estate developers in D.C., to redevelop the School's Wheaton campus
into a
mixed use development project. The School devised a Development Plan
which consisted of the acquisition of approximately 52 acres of land in
Olney,
Maryland and the construction of a new 206,000 square foot multi-story
high
school building. The School's new building and campus in Olney houses
1,200 students, a capacity of approximately 200 more than its previous
facilities in Wheaton.
Financing Overview: Approximately $51 million of debt was
required to finance the School's Development Project. As is the case with
most non-profit educational institution, Good Counsel's most appropriate method
of financing was an issuance of tax-exempt bonds. The School's bond
financing was ultimately structured as a combination of Fixed Bonds and
Variable Rate Demand Bonds (VRDBs). The School's financing was structured
to allow for certain bonds to be fully repaid from proceeds of the sale of its
Wheaton Campus. Good Counsel maintained full rights and title to its
Wheaton Campus until its new facility was ready for occupancy in Olney.
The total amount of the School's VRDBs was $18.7 million and those bonds were
repaid without penalty in 2007. The remaining amount of financing
(approximately $31 million) was structured as Non-Rated Fixed Rate Bonds with a
30 year maturity.
Wye River Group's services to the School over the course of
its financing included:
- The reworking of the School's Finance Plan to allow for the
full and immediate funding of its Development Project (Good Counsel's project
and financing was severely stalled at the time of our engagement)
- The solicitation, evaluation and recommendation of both a
letter of credit bank to support the School's VRDBs and a reputable and
highly-experienced underwriter to help structure, market and sell the School's
Non-Rated Fixed Rate Bonds
- The identification of an "alternative" issuer for the
School's bonds issue and the negotiation of additional credit enhancement from
the issuer's insurance program to backstop the letter of credit associated with
the School's VRDBs
- The negotiation of key terms & interest rates with the
School's two financing providers
- The investment of proceeds from the School's two bond issues
into several highly-structured investment vehicles and the competitive purchase
of select U.S. Treasury Securities
