Bloomberg: bond refinancing saves Prokhorov $90 million (but it's actually more); estimated income well below earlier projections
As Bloomberg reported yesterday, Barclays Center Refinancing Saves $90 Million for Prokhorov:
Charles Mierswa, chief financial officer of the Nets and Barclays Center, said the amount is based on present value savings, or the current worth of a future steam of cash flows. Investors placed orders for almost 10 times the amount of bonds available, he said.While the tax-exempt financing, enabled by the nominal state ownership of the arena, would save Prokhorov's Onexim Sports & Entertainment $90 million over the original bond payments his firm took over after buying Forest City Enterprises' 55% share of the arena last year, that's not all the savings.
...The largest piece of the deal, $228.5 million of uninsured bonds with a 5 percent coupon maturing in 2042, was priced to yield 2.88 percent. The debt, which is callable in January 2027, yields 1.44 percentage point more than top-rated debt of the same maturity, according to data compiled by Bloomberg.
The bonds, which were issued by the Brooklyn Arena Local Development Corporation and are backed by payments in lieu of taxes, will refinance debt issued in 2009 at a top yield of 8 percent.
Expression of confidence?
“The overwhelming positive investor response to this bond offering demonstrates the market’s confidence in the leadership of Barclays Center and the operations of the venue,” Brett Yormark, chief executive of Brooklyn Sports & Entertainment, told Bloomberg.
Actually, the projected Net Operating Income this coming year of $46 million is well below the long predicted $70 million or $65 million by original developer Forest City Ratner/Forest City Enterprises, even the downgraded May 2015 estimate of $55 million.