DALLAS -- The St. Louis Regional Convention and Sports Complex Authority today will price a $265 million issue that gives investors a choice of three separate credits in one issue.

The lease revenue deal -- the largest brought to market this year -- will finance the expansion of the city's Cervantes Convention Center and construction of a 70,000-seat domed stadium with three series of tax-exempt bonds structured around restrictions in the Tax Reform Act of 1986.

The project, which has been discussed since the early 1980s, was one of 25 sports facilities exempted from the restrictions by transition rules.

Robert Ballsrud, bond lawyer at Gilmore & Bell in St. Louis, the underwriter's counsel, said the authority did not use the relevant transition rule before it expired last Dec. 31 because that point a legal challenge targeting the project had not yet been resolved.

Congress in 1986 banned the use of tax-exempt private-activity bonds to finance sports stadiums. be able to sell tax-exempts, the stadium must be publicly owned and operated and cannot violate the 10% private-use test.

Under the 10% rule, private entities cannot use the stadium more than 10% of the time or secure more than 10% of its bonds.

Even so, tax-exempt funding will be used under a unique arrangement in which Missouri, St. Louis County, and the city have each pledged to make annual appropriations to pay an estimated $20 million in debt service.

To skirt tax law restrictions, bondholders will hold no mortgage on the multipurpose stadium and convention center and have no claim to project revenues. Mr. Ballsrud added, "A mortgage could not be given to bondholders in order to qualify it as a government-purpose issue." This is to ensure that private entities are not securing more than 10% of the bonds.

The indenture does protect investors, however, by insuring that in the event of a default, the convention center could no longer be used for many types of meetings and sporting events.

"The real leverage they [bondholders] have is that if any of the sponsors miss a payment . . . the convention center can no longer be used for conventions or pro football," he said. "They could still have trade shows there, but this [provision] would affect about 60% of the business."

But that kind of structure, which combines three credits in one issue, is so complicated that it drew split ratings from three Wall Street agencies and includes a series of bonds backed by the city of St. Louis that carries only one rating: BBB-minus from Fitch Investors Service.

William Darmstaedter, vice president and manager of public finance at the Boatmen's National Bank of St. Louis, the co-financial adviser on the project, expects strong demand and aggressive pricing that will give the project an average effective rate as 7.40%.

An underwriter's group led by Smith Barney, Harris Upham & Co. this afternoon expects to price the $56.92 million series of bonds backed by a pledge of appropriations from the city of St. Louis. Officials predict interest rates in the low 8% range for the series, but will not be more specific.

The other series $133.68 million backed by Missouri and $66.19 million backed by St. Louis County, are scheduled for pricing Wednesday, but could be tentatively priced today.

Wall Street analysts agree that the city's share of the project is the weakest part of the financing plan. The authority did not ask Moody's Investors Service or Standard & Poor's Corp. to rate that series because those agencies already rate St. Louis's general obligation bonds a dismal Baa and triple-B, respectively.

"In our ratings we were looking at each of the credits on their own and their ability to pay," said Richard Raphael, senior vice president at Fitch, which assigned a triple-B to the city's GO bonds.

While the city series is secured by annual appropriations, St. Louis officials plan to study a possible referendum by November 1992 in which voters could dedicate a specific revenue for debt service on the project.

Wall Street analysts gave a mixed endorsement to the series backed by Missouri, which has a GO rating of triple-A from all three agencies, and St. Louis County, which is rated AA-plus.

The state and county studium series were respectively rated double-A, A-plus by Fitch; A1 and A by Moody's; and A-Plus and BBB-plus by Standard & Poor's.

"I think Standard & Poor's was more conservative in their approach," said Ray Kljajic, managing director at Smith Barney in Chicago. "Each agency seemed to focus on different aspects. Each one has a different approach."

Only St. Louis county has secured their debt service with a dedicated tax -- ahotel tax approved by voters last year. While it is expected to raise the country's $5 million annual payment, county officials recently voted to also pledge other funds to make up any shortfall.

On Friday, Standard & Poor's cited concerns over whether the economic benefits that the state, county, and city expected would materialize. In giving the issue its lowest set of ratings, analysts cited questions over the marketing of a larger convention center, an undersupply of hotel rooms, and the future of financially troubled TWA, which is based in St. Louis.

Standard & Poor's also cited concerns over the ability of the city to obtain a National Football League franchise, as city officials hope building the stadium will do.

"Although the facility can operate without a football team, failure to obtain a franchise may reduce public support for the project," the agency said.

But project officials say that widespread political support has been a hallmark of the complex transaction.

"There's no doubt that it is very complex and made more complex than most transactions because you have the city, the county, and the legislature," said Lawrence Akley, executive director of the authority.

Also, there has been persistent opposition to the project by the Rev. Larry Rice, a local television minister and advocate for the homeless. Mr. Rice, who was not available for comment, stalled the project for 18 months with a legal challenge that was settled last month after the Missouri Supreme Court rejected an appeal.

More recently, Mr. Rice has begun petition drives -- which are disclosed in the official statement -- designed to block future lease payments. Project officials are not worried.

"We feel very comfortable that there are many legal weaknesses in his petition that we could challenge," said Mr. Akley.

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