BB&T Capital Markets Closes $12,485,000 Financing for Coweta Charter Academy in Senoia, Ga.

Transaction Summary

On June 5, 2014, BB&T Capital Markets closed a $12,485,000 Series 2014A/B tax-exempt and taxable fixed rate bond transaction through the Development Authority of the City of Senoia. The transaction financed a charter school in Senoia for the Georgia Charter Educational Foundation, Inc. The primary purpose of the Series 2014 Bonds was to finance the acquisition of the 57,871-square-feet of improvements as well as equipping and furnishing the K-8 classrooms at the charter school. Bond proceeds also provided funds for a debt service reserve fund, a capitalized interest fund, and a working capital fund.

About the Companies

Georgia Charter Educational Foundation, Inc. (GCEF or the foundation), was originally incorporated in June 2009 to oversee Coweta Charter Academy (Coweta or the school) and its sister school, Cherokee Charter Academy. Coweta’s charter allows the school to pursue its own method of educating students, while maintaining flexibility to negotiate service contracts outside the umbrella of the local school districts. The school is managed by Charter Schools USA (CSUSA), one of the nation’s largest private operators of public charter schools. CSUSA was the first charter school management organization to receive the Southern Associate of College and Schools accreditation, which recognizes the strength of the curriculum and processes in place to ensure quality education for all students. The school opened for the 2010-11 school year, during which it served 220 students in grades K-3. Faced with glowing reviews from current students and parents, a growing demand among prospective students, and solid academic performance, Coweta needed long-term financing. Therefore, in mid-2011, Coweta approached Michael Braun, BB&T Capital Markets managing director, to discuss opportunities for permanent financing. However, the state legislative environment in Georgia presented headwinds that delayed the financing. In early 2014, the environment had improved and permitted the financing to proceed. BB&T Capital Markets defined a long-term financing structure and process to acquire and equip the charter school. As of May 2014, the school enrolled more than 600 students in grades K-6.

Education

Our Education Finance Group provides comprehensive capital structure planning and execution for higher education facilities, charter schools, private k-12 schools and public school systems. With a robust bond distribution platform and the resources of one of the nation’s strongest financial institutions, we can serve the needs of the education sector with focus and expert execution.

About BB&T Capital Markets

BB&T Capital Markets offers an integrated platform of equity and debt underwriting, M&A advisory, corporate banking, equity research and sales and trading. Headquartered in Richmond, Va., with offices throughout the U.S., we have specific expertise within eleven distinct industry verticals including Aerospace, Defense & Government Services; Automotive Aftermarket; Commercial & Industrial; Financial Services; Food & Agribusiness; Logistics & Transportation Services; Healthcare; Education; Energy; Real Estate; and Retail & Consumer. Our commitment to industry expertise, combined with our resources as one of the nation's strongest financial institutions, strategically positions BB&T Capital Markets to build lasting relationships and contribute measurably to the long-term success of our clients.

  • Georgia Charter Educational Foundation, Inc.

    On June 5, 2014, BB&T Capital Markets closed a $12,485,000 Series 2014A/B tax-exempt and taxable fixed rate bond transaction through the Development Authority of the City of Senoia. The transaction financed a charter school in Senoia for the Georgia Charter Educational Foundation, Inc. The primary purpose of the Series 2014 Bonds was to finance the acquisition of the 57,871-square-feet of improvements as well as equipping and furnishing the K-8 classrooms at the charter school. Bond proceeds also provided funds for a debt service reserve fund, a capitalized interest fund, and a working capital fund.

    Read More
  • Universal Academy

    On March 27, 2014, BB&T Capital Markets closed a $29,440,000 Series 2014A/B tax exempt and taxable fixed rate bond transaction for Universal Academy (Universal), a charter school with locations in Coppell and Irving, Texas. The primary purpose of the Series 2014A/B bond issue was to finance the cost of the acquisition, improvement, construction, renovation, and equipping of educational facilities for Universal. In addition, bond proceeds provided funds for the refinancing of existing debt, as well as the financing of a debt service reserve fund and approximately 12 months of capitalized interest.

    Read More
  • Nueva Esperanza, Inc.

    On December 20, 2013, BB&T Capital Markets closed a $32 million tax-exempt fixed rate bond transaction for Nueva Esperanza, Inc. (Esperanza). Esperanza provides support to the Hispanic community nationally through three primary areas of charitable activities; education and employment services, community economic development, and national nonprofit capacity-building. Local education initiatives include Esperanza Academy Charter School (Esperanza Academy), a charter school located in Philadelphia, Pa., as well as other educational institutions. The primary purpose of the Series 2013 Bonds is to 1) fund renovations and improvements, including the expansion and interior build-out of a middle school, construction of a shared community space, a gymnasium, an auditorium for performing arts and parking facilities; and 2) refinance existing loans, including a New Market Tax Credit (NMTC) Loan. In addition, bond proceeds provide funds for a debt service reserve fund and approximately 23 months of capitalized interest. Esperanza was also awarded a Redevelopment Assistance Capital Program Grant and a grant from the city of Philadelphia. The financing presented several challenges which BB&T Capital Markets addressed. First, the existing financing structure included a NMTC Loan component resulting in complex legal issues regarding the defeasance that ultimately needed to be resolved before the expansion financing could occur. Second, the financing needed to be completed in time to allow Esperanza Academy to continue its growth and open in fall 2014. Third, Esperanza and BB&T Capital Markets needed to navigate a challenging credit environment and rising interest rate market while articulating the complex security package of the proposed credit. BB&T Capital Markets defined a flexible financing structure and process in addition to an intricate security structure that enabled strong collateral and cash flow coverage. Market acceptance was primarily due to Nueva Esperanza’s well-qualified management team, its diverse revenue sources within the security package, and Esperanza Academy's nationally recognized academic performance. Ultimately, BB&T Capital Markets was successful in leveraging its developed sales and trading platform as well as its established relationships with charter school specific investors. These focused efforts, as well as BB&T Capital Markets’ industry leading distribution capabilities and Nueva Esperanza, Inc.’s, unique credit profile resulted in a simplified financing structure that included $32 million in tax-exempt fixed rate bonds with a final maturity of 2043. Additionally, BB&T Capital Markets closed the financing within the school’s desired timeframe, allowing the new facility to open as scheduled.

    Read More
  • Southwest Louisiana Charter Academy

    On December 18, 2013, BB&T Capital Markets closed a $17,480,000 Series 2013 (tax-exempt) fixed rate bond transaction through the Louisiana Public Facilities Authority. The transaction financed a preeminent charter school in Lake Charles, La. for Southwest Louisiana Charter Academy Foundation, Inc. The primary purpose of the Series 2013 Bonds was to finance the acquisition of an approximately 10-acre parcel of land as well as the construction, equipping and furnishing of a 70,000 squarefoot,grade K-8 charter school facility. Bond proceeds also provided funds for a debt service reserve fund and approximately 18 months of capitalized interest. The financing presented several challenges BB&T Capital Market was able to address. First, SLCA’s contractors needed to proceed quickly in order to open in time for the upcoming school year and suffice student demand. Second, uncertainty in financial markets due to outflows in the buy-side fixed income investment community provided an uneasy backdrop for bond marketing. Third, the charter school bond market is still relatively nascent. These challenges were addressed by BB&T through multiple discussions with investors. The successful issuance of the Series 2013 bonds has enabled SLCA to hone its focus on academic achievement and continued growth in order to meet the needs of its current and prospective students in Lake Charles. Ultimately, BB&T Capital Markets was successful in leveraging its developed sales and trading platform as well as its established relationships the charter school investment community. BB&T Capital Markets’ industry-leading distribution capabilities and Southwest Louisiana Charter Academy Foundation’s unique credit profile resulted in a financing structure that included $17,480,000 tax-exempt fixed rate bonds. The Series 2013 fixed rate bonds were issued with a final maturity of 2043.

    Read More
  • Hodges University, Inc.

    On November 14, 2013, BB&T Capital Markets closed a $28,890,000 tax-exempt fixed rate bond issuance for Hodges University, Inc. ("Hodges"). The primary purpose of the Series 2013 Bonds was for the acquisition of an existing building that Hodges previously leased, located in Naples, Fl., refunding of Hodges' outstanding Educational Facilities Revenue Bonds, funding of a debt service reserve fund for the Series 2013 bonds, and payment of the expenses incurred in connection with the bond issuance. The financing presented several challenges which BB&T Capital Markets addressed. First and foremost, Hodges is a small, non-traditional university whose unique credit profile was unfamiliar to the public capital markets. BB&T guided the University and effectively articulated its credit characteristics to the investment community. Second, BB&T Capital Markets needed to navigate a challenging credit environment and rising interest rate market. Third, there were real estate issues associated with the property being acquired. BB&T Capital Markets defined a flexible financing structure and process in addition to developing and articulating the University’s true credit strengths. Additional mitigating factors included Hodges’ depth and breadth of leadership, its salubrious collateral and cash flow coverage, as well as its evident market demand in a niche market as evidenced by its very high matriculation rate. Ultimately, BB&T Capital Markets was successful in leveraging its developed sales and trading platform as well as its established relationships with the higher education investment community. These focused efforts, as well as BB&T Capital Markets’ industry leading distribution capabilities and Hodges' unique credit profile resulted in an effective financing structure that included $28,890,000 tax-exempt fixed rate bonds with a final maturity of 2043 and a lower debt service compared to prior lease payments.

    Read More
  • Renaissance Charter School, Inc.

    On November 1, 2013, BB&T Capital Markets closed a $73,040,000 Series 2013A (tax-exempt) and $7,485,000 Series 2013B (taxable) fixed rate bond transaction through the Florida Development Finance Corporation. The transaction financed a group of five Florida charter schools located in Jacksonville, Port St. Lucie, Orlando and West Palm Beach for Renaissance Charter Schools. The primary purpose of the Series 2013 Bonds was to finance or refinance the costs of acquiring, constructing and equipping charter school facilities, which opened in August 2013. The charter school facilities range from approximately 61,000 to 105,000-square-feet, each with an enrollment capacity of up to 1,145 students in grades K-8. Bond proceeds also provided funds for a debt service reserve fund and approximately 7 months of capitalized interest. The Financing presented several challenges that BB&T Capital Markets was able to address. First, uncertainty in financial markets due to a potential government shutdown and federal debt limits provided an uneasy backdrop for the bond markets. Second, the charter school bond market is still relatively nascent. These challenges were addressed by BB&T through multiple discussions with investors and a site visit to the schools. The successful issuance of the Series 2013A&B bonds enabled Renaissance to continue its focus on growth and academic achievement in order to meet the needs of its current and prospective students in Florida.

    Read More
  • Rocky Mountain Classical Academy

    On October 17, 2013, BB&T Capital Markets closed a $28,050,000 Series 2013 fixed rate bond transaction for Rocky Mountain Classical Academy, a charter school located in Colorado Springs, Colorado. The primary purpose of the Series 2013 Bonds was to construct a new facility, an 89,800-square-foot, 47-classroom facility for the charter school, acquire a 12.7-acre parcel of land for the new facility, refinance an existing loan, and reimburse the school for recent project expenditures. In addition, bond proceeds also provided funds for a debt service reserve fund and approximately 12 months of capitalized interest. The Financing presented several challenges that BB&T Capital Markets was able to address. First, the financing needed to be completed in time to allow the facility to open in Fall 2014. Second, the school needed to navigate a challenging credit environment and address the key aspects of its effective management transition, including the appointment of a dynamic Chief Administrative Officer, Ms. Christianna Fogler. Third, the School’s project was further challenged by a rising interest rate environment and rising construction costs. BB&T worked with the contractor and District/Authorizer on a phased approach for the project construction to allow the facility to open in Fall 2014. The final two challenges were addressed by BB&T with multiple discussions with investors, including direct conversation with the District/Authorizer detailing the historical relationship with the School and the defined plan to include the School in the growth of the district. Additional mitigating factors included the tremendous growth and demand in the school’s primary market area, the School’s comparatively strong and improving academic success, the engagement of a well-respected construction team, and the overwhelming support and assistance of the District/Authorizer.

    Read More
  • Bay Haven Charter Academy

    On April 25, 2013, BB&T Capital Markets closed a $19,800,000 Series 2013A ‘BBB-‘ Rated Tax-Exempt Fixed Rate Bond Issue and $465,000 Series 2013B ‘BBB-‘ Rated Taxable Fixed Rate Bond Issue (collectively, the “Series 2013 Bonds”) for Bay Haven Charter Academy, Inc. Proceeds of the Series 2013 Bonds will be used to fund the acquisition of a 24-acre parcel of land and the construction costs for a two-story, 85,000-square-foot middle and high school facility, located in Lynn Haven, Fla. Tax-exempt bond proceeds will fund all project costs as well as a debt service reserve fund and approximately 24-months of capitalized interest. Taxable proceeds will fund costs of issuance in excess of the 2 percent limitation. BB&T Capital Markets defined and executed a financing structure and process, which involved negotiating a revised security and covenant package with the existing bondholders, acting as liaison to the rating agency and soliciting the bond issue to new institutional investors. Although not involved in the 2010 bond issue, BB&T Capital Markets replaced the previous underwriter and was successful in obtaining the consents needed for the additional debt issuance. BB&T Capital Markets also was able to expedite the financing process by securing a bridge loan from its parent company. These focused efforts, as well as BB&T Capital Markets’ industry leading distribution capabilities and ability to bring new buyers for the debt placement, as well as Bay Haven’s strong credit profile, resulted in a financing structure that included $19,800,000 tax-exempt fixed rate bonds and $465,000 taxable fixed rate bonds. The Series 2013 issue is rated ‘BBB-‘ with a stable outlook by Standard & Poor’s. The Series 2013A fixed rate bonds were issued with a final maturity of 2048 with yields ranging from 4.84 percent to 5.15 percent. The Series 2013B taxable bonds had an interest rate of 5.90 percent with a 2022 maturity. The financing was well-received by the bond market with more than 10 institutions placing orders.

    Read More
  • Bank Qualified Placement Structuring Agent - Edison State College
  • Qualified School Construction Bonds - Virginia Public School Authority
  • General Obligation Sales Tax Bonds - Glynn County School District
  • Build America Bonds - UNCW
  • Bank Qualified Placement Structuring Agent - Kentucky Wesleyan College