A Pennsylvania authority has yet to approve a $100 million bond issue on behalf of Sun Co. amid complaints that the transaction is unnecessary and excludes minority underwriters.
A spokesman for the Pennsylvania Economic Development Financing Authority said the agency has not delayed the deal, even though the issue's lead underwriters at Goldman, Sachs & Co. recently said the agency wanted to price the transaction last week.
But in the last two weeks, taxpayer activists and bankers from minorityowned firms have criticized the issue, which will help the Sun Co., a Pennsylvania-based billion-dollar oil concem, obtain tax-exempt financing to build a wastewater treatment plant.
Sun would pay all the interest and principal on the bonds, but taxpayer groups complain that the state is lending its taxexempt status to a large company that already has easy access to the capital markets.
Minority bankers, for their part, say the agency failed to appoint a minority underwriter for the issue, despite a state law that urges the authority to include minority firms on its issues.
Before Goldman can price the deal, the bond allocation must be approved by state Commerce Secretary Andrew Greenberg, who is chairman of the authority, and then by Gov. Bob Casey. Greenberg has yet to sign, and authority officials will not say' why.
"There are things we have to consider," said Ron Jury, a press secretary for the state's Commerce Department.
Jury refused to elaborate, but he said criticisms levied by the taxpayer groups and minority bankers "are not part of the equation or the process.
"We are simply not ready to make this decision," Jury said. Spokesmen for Casey could not be reached for comment, arid Frank Kinney, the issue's lead banker at Goldman, did not return telephone calls. The authority helps private companies located in the state finance capital projects. The Sun issue will finance construction of a wastewater treatment plant at its Marcus Hooks refinery in Delaware County, Pa. According to standards set by the federal government, the authority may allocate about $600 million of tax-exempt bonds a year to private companies. The governor as well as the state's commerce secretary must approve the sales, and the Sun issue would account for about one-sixth of the agency's bonding authority.
Commerce Department officials answer talk of corporate welfare by pointing to the authority's mandate to issue bonds for projects that will enhance Pennsylvania's economy or protect the environment. The Sun issue, for example, will finance a wastewater treatment plant that will create 474 jobs and retain 853 jobs, they say.
In addition, the authority has come under fire because it has never included a minority-owned firm on any of its bond syndicates even though an amendment to the authority's enacting legislation says it should.
The state legislature and the governor passed the amendment last year. On the Sun Co. deal, Goldman will serve as bookrunning senior manager, and CS First Boston as the issue's co-senior manager. But Commerce Department officials reject these criticisms as well. Companies like Sun select their own underwriters, and the amendment only requires some effort by the authority's chairman to encourage minority representation on the underwriting team.
