CHICAGO -- Illinois officials have decided to change an upcoming $110 million competitive Build Illinois revenue bond issue to an approximately $210 million negotiated issue after Dean Witter Reynolds came up with a plan to refund some outstanding debt.
Arnold Kanter, chief counsel to Gov. Jim Edgar, said the decision reflected the administration's goal of keeping the door open to new financing ideas despite the fact the approximate amounts and types of bond issues for the current fiscal year, which began July 1, were set earlier this year.
In addition, the administration has already chosen senior managing underwriters for more than $400 million of negotiated college saver, convention center, and Build Illinois bond issues in fiscal 1992.
Mr. Kanter explained that if a firm has an idea that benefits the state, that firm should get the resulting business.
"This is one thing we are telling all the firms. Our offices are open and we're willing to listen, " he said. "If ] it is a solid concept that we're comfortable with, we'll do it, and the firm bringing in the concept will be protected."
bill Ledbetter, division chief of the state bureau of the budget's economic development division, said Dean Witter prioritized each outstanding Build Illinois maturity on a present-value basis to indicate the "most attractive candidates" for refunding.
He added that Dean Witter's plan met the vureau's refunding threshold of a present-value savings equal to 5% of the refunding issue size. That would mean $5 million from a $100 million issue.
Alex Rorke, a managing director at Dean Witter, said the refunding plan could mean "up to $11 million in total savings, which is substantially over $5 million in present value." He pointed out that his firm had created the computer model that was able to prioritize the maturities in the state's previous Build Illinois issues.
The state plans to price the issue by the end of this month and close in November, Mr. Rorke said. He added that interest rates at the time of the sale would determine the specific maturities to be refunded.
The Edgar administration, which took office last January, had sent a request for qualifications to underwriters earlier in the year to review firms interested in doing business in the state and, according to Mr. Kanter, "open the process a little bit more than it was opened in the past."
Many of the same firms that received the state's bond business under the previous administration of Gov. Jim Thompson, however, were awarded the top spots on fiscal 1992 bond issues. Those firms included Dean Witter, which is rotating with First Chicago Capital Markets as senior manager of the state's college saver general obligation bond issues.
Administration officials have said bond counsel and underwriting firms were chosen for their expertise, based on their answers to the request for qualifications and on in-person interviews.
Bear, Stearns & Co., which was picked to head negotiated Build Illinois sales tax revenues bond issues, will be a co-manager on the upcoming issue, according to Mr. Ledbetter. The other co-managers are First Boston Corp.; Smith Barney, Harris Upham & Co.; Dain Bosworth Inc.; Artemis Capital Group; and M.R. Beal & Co.
Mr. Ledbetter said Bear Stearns will remain the senior manager on next spring's $100 million to $150 million Build Illinois issue.