The University of the Virgin Islands Board of Trustees approved a resolution Saturday paving the way for a $25 million bond issue.
The general obligation bonds would be used to complete construction and outfit the new sports and fitness center on the St. Thomas campus, and to retire the university's existing obligations.
The trustees' vote came after they received word that bond insurance had been approved by American Capital Access Insurance Co. (ACA).
The bond proceeds would refinance a 1994 bond issue, provide sports center funding and appropriate monies toward the institution’s 10-year capital development program.
Trustee Roy D. Jackson, who chairs the board’s finance committee, said four options are under review for restructuring the previous bond issue and disbursing the anticipated proceeds.
He did not elaborate on the available options, saying further talks are needed with both financial consultants and ACA before a final presentation is made to the finance committee for approval.
Financial consultants Matthew H. Hobbs of CIBC World Markets, Napoleon Nelson of Public Financial Management Inc. and Bond Counsel Patricia A. Goins of Hawkins, Delafield and Wood made presentations to the trustees about the bond initiative.
Nelson said several conditions have been made by ACA in order to move ahead with the bond issuance.
"We are now in the process of working through those commitments," he said. "We’ve had a couple of telephone conferences with ACA and UVI attorneys to bring about a common understanding of the conditions the insurance company wants met."
Hobbs noted key differences with the new bond issuance include the fact that the proposed bonds are single -A rated and are investment grade. In 1994, the bonds were floated privately and were not rated.
UVI finds itself in a better position in the bond market today, Hobbs said. "It’s a tremendous feather in the cap of the university to carry this A-rating."
Under questioning by trustee Terence Todman, Hobbs revealed that the principal balance on the 1994 bond issuance is "somewhere around $13 million."
Goins said the amended resolution, which was unanimously approved by the trustees, would not only provide up to $25 million in general obligation bond proceeds but would allow for significant savings in annual interest, which cannot exceed 7 percent per annum. The bonds are to be repaid over a 30-year period.
UVI President Orville Kean lauded the efforts of the board’s finance committee, saying it had done a herculean task to bring about the bond initiative, a move he termed "financial wizardry."
He also sang the praises of Malcolm Kirwan, UVI vice-president for Administration and Finance. Kean said UVI is way ahead of other Caribbean institutions of learning in its level of sophistication and ability to plan and secure funds for capital improvement projects.
"This has arisen out of necessity for the university to meet its challenges," Kean said. "We really have a fantastic team from the board level to the college student . . . this is a milestone for the University of the Virgin Islands and for higher education in the Caribbean."
Board of Trustees chairman Auguste E. Rimpel, a partner with the firm of Price Waterhouse, expressed similar sentiments about the manner in which the bond issuance is proceeding.