In the News: Recent Developments

November 9, 2010

Describe the project, including issues identified and addressed by Saber Partners, LLC:

Obtaining the lowest cost financing through the issuance of AAA rated bonds to pay for the construction of environmental control facilities pursuant to a state law enacted in 2005. Advised Commission on establishing the “best practices” for its financing order and the structure, marketing and sale of the bonds.

Please rate Saber Partners performance of projects/services provided:

Exceptional. Saber’s market knowledge and ability to represent the interests of the Commission in negotiations with underwriters. They identified and developed a plan to reduce the overall cost of the proposed financing in both the issuance expenses and achievement of the interest rate. Issuance costs proposed by the utility were reduced by approximately $8.5 million after review by Saber. The bond’s interest rate credit spread above market benchmarks, in each public offering, was the lowest obtained to date compared to all other similar securities (structure, rating and maturity).

Description of projects/services provided:

Two contracts governing two transactions for the given period above totally approximately $550 million in bonds. First contract 2/06- 4/07; second 8/09-12/09. Contract included expenses of bond counsel. See Public Service Commission of West Virginia Case # 05-0402-E-CN and Case # 05-0750-E-PC and related Orders dated April 7, 2007 and September 30, 2009.

  • Rate Saber Partners overall performance (Exceptional, Above Standard, Acceptable, Needed Improvement):
    Exceptional. Provided critical input into the drafting of the Commission’s financing orders and establishing the procedures and process for issuing the bonds as described in the financing order’s “best practices.”
  • Rate Saber Partners responsiveness to requirements, methodology and project approach:
    Exceptional. Saber developed a work plan and timetable that was comprehensive, methodical and efficient. Policy and procedural issues were identified, options presented and problems resolved to our satisfaction.
  • Rate Saber Partners’ personnel, subconsultants’ experience, technical certifications, quality & accuracy of work:
    Exceptional. Broad and deep knowledge of the capital markets and the public offering process including costs of issuance, legal and regulatory requirements, disclosure issues and marketing strategies.
  • Rate Saber Partners’ response to potential problems and their problem solving methods:
    Exceptional. Developed alternatives to market conventions and proposals put forward by the utility’s financial advisors and underwriters that achieved the Commission’ legislative and regulatory goals and reduced financing costs.
  • Were services/projects completed on schedule and within budget?
    Yes. Performance benchmarks were established in the Saber contract and Saber met or exceeded them.

General Comments about Saber Partners:

Saber provided the highest quality services as financial advisor. We have no hesitation employing them again and in recommending them to any other entity seeking to structure and market securities to achieve the lowest all-in cost of funds.

Saber’s initial work in 2006-2007 allowed the Commission to approve and implement a follow-on transaction in 2009, after the 2008 credit crisis, in an efficient manner that protected ratepayer interests and allowed the financing of the project well below the utility’s original proposals. The 2007 and 2009 transactions were the lowest cost transactions in terms of both issuance expenses and interest rate compared to similarly structured and AAA-rated bond offerings for other utilities at the time of offering.