Denver-based Kirchner Moore is conducting tender offers of high-interest Colorado housing bonds with the intention of escrowing the bonds that are tendered and calling the ones that are not, but market participants say the structure is fraught with tax and legal uncertainties.

To escrow the tendered bonds, the issuers -- Adams County and Jefferson County -- would sell collateralized mortgage obligations. The proceeds from the CMOs would purchase triple-A securities for the escrow, and the tendered bonds would increase in price, to about 118 from the 105 tender price. By then selling the escrowed bonds, according to sources close to the deal, both the issuers and Kirchner Moore would realize hefty profits.

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