Title
RESOLUTION AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $18,000,000 PRINCIPAL AMOUNT OF TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS FOR BEECHCRAFT CORPORATION (FORMERLY HAWKER BEECHCRAFT CORPORATION).
Presented By: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Adopt the resolution.
Body
In 1990, the County indicated its intent to issue up to $400,000,000 of Industrial Revenue Bonds for the purpose of paying the costs of constructing new facilities and purchasing machinery and equipment to be located in the County and leased to Raytheon Aircraft Company. In 1998, the County approved a Resolution of Intent to issue up to an additional $1,000,000,000 of Industrial Revenue Bonds for the benefit of Hawker Beechcraft Corporation, as successor to Raytheon Aircraft Company. On September 24, 2008, the County approved a third Resolution of Intent (the "2008 Resolution") to issue up to an additional $500,000,000 of Industrial Revenue Bonds for the benefit of Hawker Beechcraft Corporation. The 2008 Resolution expires on December 31, 2013.
The proposed Bond Resolution authorizes a twenty-eighth series of bonds under the authority of the 2008 Resolution in the amount of not to exceed $18,000,000 (the "2013 Bonds"), for the benefit of Beechcraft Corporation, as successor to Hawker Beechcraft Corporation. In connection with the issuance of the 2013 Bonds, the County is authorized to enter into a Twenty-Eighth Supplemental Trust Indenture authorizing and securing the 2013 Bonds, a Twenty-Seventh Supplemental Lease providing for the lease of the machinery and equipment financed with the proceeds of the 2013 Bonds to Beechcraft Corporation, and a Bond Purchase Agreement pursuant to which BeechcraftHoldings LLC will purchase the Bonds. The Twenty-Eighth Supplemental Trust Indenture and the Twenty-Seventh Supplemental Lease also authorize removal of the Beechcraft Corporation's facility in Salina, Kansas, which closed in 2012, from the property pledged as security for the outstanding bonds and the transfer of any remaining personal property from Saline County to the Beechcraft Corporation's facilities in Sedgwick County.
The Bond Resolution further authorizes the release of supplemental trust indentures and lease agreements entered into in connection with the issuance of the two series of bonds issued in 2001 and 2002 and the return of property financed with the proceeds of such bonds to Beechcraft Corporation, at which time the ad valorem property tax abatement on such property will cease.
Alternatives:
Financial Considerations:
Property financed with the proceeds of the proposed Bonds will be subject to a 10-year ad valorem property tax abatement. Beechcraft estimates the issue will result in sales tax savings of approximately $350,000, and first year ad valorem property tax savings of approximately $10,000. The County has no financial obligation with respect to payment of principal of and interest on the Bonds.
Legal Considerations:
The proposed financing documents were prepared by Hinkle Law Firm LLC, Bond Counsel. They have been reviewed on behalf of the County by Gilmore & Bell, P.C., and by the County Counselor's Office.
Policy Considerations:
Outside Attendees: Joe Norton, Gilmore & Bell, P.C.
Winton M. Hinkle, Hinkle Law Firm LLC
Alexander Snyder, General Counsel and Vice President
Lisa Haffner, Director of Tax, Beechcraft Corporation
Multimedia Presentation: