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Applicants detail bond plan, bridge facility as fallback; tax status and costs left for late-filed documents
Summary
Witnesses said Barclays/Bank of America provided a bridge commitment as a backstop and that acquisition debt and issuance costs are expected to be recovered through existing rates; parties asked for documents to confirm taxable vs. tax-exempt treatment, make-whole estimates and the final financing plan.
Attorneys and company witnesses described a financing approach for the proposed acquisition that relies primarily on long-term bonds and includes a bridge commitment from Barclays and Bank of America as a fallback if the long-term bonds cannot be issued. Counsel testified the bridge is not expected to be drawn on but acknowledged it exists as a fallback.
Why it matters: Whether financing is taxable or tax-exempt, and how acquisition-related costs are recovered in rates, affect the size of future rate obligations for customers. Municipal and regulator questioners therefore sought documentary evidence of the final structure, any bridge terms, and line-item cost detail.
Key points from the hearing: - A bridge commitment exists as a fallback provided by Barclays and Bank of America; counsel acknowledged it is available but not intended to be drawn upon. - Witnesses said cost of issuance, make-whole premiums and debt-service reserve arrangements (including use of surety) are being factored into the financing plan and will be recovered over time from rates; several parties asked for an analysis showing how issuance costs will be reflected in current rates. - Counsel and witnesses repeatedly said the final financing structure will be subject to market conditions and that some tranches included taxable components based on prior refunding activity; parties requested late-file exhibits to confirm taxable vs. tax-exempt status for the bridge and for outstanding tranches.
Requests recorded on the record: late-file exhibits (numbered in the hearing) requesting the bridge tax status, the final debt allocation between senior and subordinate obligations and the make-whole calculations tied to maturity tranches. Regulators also asked for narrative showing projected savings from use of state procurement contracts if AWA obtains access post-transaction.
Ending: Parties agreed to provide bond documents and analysis in late-filed exhibits before the continuation hearing; the transcript shows multiple follow-up read-ins and late-file requests on these financing questions.
