ATLANTA -- Dade County, Fla., has chosen underwriting syndicates for two upcoming aviation bond issues, tapping Goldman, Sachs & Co. to head a $200 million new-money issue, and PaineWebber Inc. to lead a $147 million refunding deal.
The selections, made late last Thursday, capped a closely watched contest and a week in which the county's 13-member commission had considered and reconsidered choices. The selection of managers was also reportedly a bitter disappointment for Merrill Lynch & Co. Although ranked first by the county's financial staff for both of the deals, the firm did not receive a role in either.
"We're comfortable with the selections," said Edward Marquez, the county's director of finance, on Friday.
"The idea now is to move as quickly forward as possible in selling these bonds, with the refunding hopefully by the end of November, and the new-money issue soon thereafter," he said.
Marquez said the commissioners also named three other levels of managers for each of the deals: two co-semor managers, two senior co-managers, and five co-managers.
He said the commissioners specified bond allotments for each type of manager. For each issue, senior managers will be allocated 29% of the bonds; co-senior managers, 15%; senior co-managers, 8%; and co-managers, 5%.
For the new-money deal, the co-senior manager slots went to two joint ventures: CS First Boston and Pryor, McClendon, Counts & Co.; and Smith Mitchell Investment Group and Howard Gary & Co. For the refunding bonds, the slots went to Douglas James Securities Inc., a Tampa, Fla.-based firm, and FAIC Securities of Miami.
Prudential Securities Inc. and Donaldson, Lufkin & Jenrette Securities Co. were chosen as senior co-managers on the new-money deal. Artemis Capital Group Inc. and a joint venture of Bear, Steams & Co., First Union Securities, and Jackson Securities were named to this slot for the refunding issue.
Co-managers for the new-money bonds were: Grigsby Brandford & Co., Estrada Hinojosa & Co. of Dallas, Emax Securities Inc., Miami-based Guzman & Co., and Southwestern Capital Markets Inc. of San Antonio. For the refunding bonds, the co-managers were: Pryor McClendon & Counts, American Government Certificates & Funds Corp., Muriel Siebert & Co., Argyle Securities Corp., and LM Securities Capital Co.
An evaluation committee of county financial professionals had ranked Merrill Lynch first as a candidate for both deals.
In scoring for the senior manager slot on the new-money bonds, Merrill was awarded 461.12 points, compared with 432.67 for Goldman and 427.88 for PaineWebber Inc. For the top position on the refunding issue, Merrill scored 465.62, with Goldman scoring 459.67 and PaineWebber 426.38.
In a memo to the county commissioners last Tuesday, county manager Joaquin G. Avino wrote that Merrill should not serve as lead manager on either of the financings because it had been picked to head the county's recent $408 million issue of water and sewer refunding bonds. He also wrote that Merrill had ranked third in compensation to managers over the past three years.
"However, in order to compensate them for their good showing in the rankings, I have included them as senior co-manager on the refunding bonds," Avino added.
Later, at the recommendation of the commission's finance committee, Merrill was eliminated from any role in the transaction.
In a Tuesday memo on its selection of underwriting teams, finance chairman James Burke wrote: "The committee determined that Merrill Lynch should be dropped altogether in order to open up a slot, which is consistent with the county manager's policy to move Merrill Lynch down due to past participation in county bond issues."
Francis E. King, managing director of public finance at Merrill's Clearwater, Fla., office, declined comment on the matter Friday. At the commissioners' meeting Thursday, King protested the exclusion of his firm from the management groups, participants said.
In another last-minute change, commissioners decided to eliminate Kidder, Peabody & Co. from one of the co-senior manager slots on the new-money bonds. According to county officials, the change was made because of PaineWebber Group's pending purchase of Kidder.
Marquez, the county's finance director, said that with the manager selection complete for the aviation issues, the commissioners will now turn their attention to implementing a new system of underwriter selection. Under the new plan, underwriters will be rotated from a small pool of dealers chosen every three years.
The first deal under the new system would probably be a new-money financing of $100 million to $400 million for the county's water and sewer system.