Disclosures, re: Post-Issue Ongoing Flashcards

1
Q

Once bond issuer complies w/ disclosure, is it done?

A

No. Must continue to disclose annually.

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2
Q

Who is obligated to disclose?

A

Issuer & any Obligated Person.

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3
Q

What is an “Obligated Person”

A
POST, ON-GOING
-----------
Anyone contractually bound to support repayment of the debt.
Included:  Issuer
Excluded:  Insurer.
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4
Q

How does Obligated Person become bound to ongoing disclosure?

A

Now required to covenant to annually disclose in the Official Statement.

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5
Q

What if you don’t disclose?

A

Shut out of the municipal securities market.

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6
Q

What must you disclose?

A

Annual financial info, and audited financial statements if & when ready.
Material events.

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7
Q

What are 7 mandatory “material events” that must be disclosed?

A

post-wedding Event:
Tenderly we Merged until new Debt + Taxes, then we lost Trust & Accelerated to Bankruptcy
———–
(1) Tender offers.
(2) Merger.
(3) Bankruptcy.
(4) Adverse tax opinions or events affecting tax-exempt status of the security
(5) Appointment of successor trustee.
(6) Default or acceleration.
(7) Incur new debt or altered old, if material.
Ex.- Unscheduled draws on reserves or credit enhancements reflecting financial difficulties

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8
Q

A covenant to disclose must contain what 4 items?

A

POST, ON-GOING

(a) Type of financial info to be provided;
(b) The Obligated Person to whom it will relate;
(c) Accounting principles to be applied; &
(d) Date will provide & to whom.

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9
Q

What if LG is issuing a conduit bond & has no direct connection to the transaction?

A

Too bad. LG is an “Obligated Person” & must annually disclose.

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10
Q

Is anyone exempt from annual disclosure?

A
POST, ON-GOING
-----------
Small Issuer Exemption.  Requires:
(a)  $10M or less aggregate.
(b)  K to discl if requested & material events as occur.
(c)  Contact info of discloser on the Off. Stmt.
-----------
ALSO - conduit files no 2004 (fees)
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11
Q

How submit disclosure?

A

In writing electronically.

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12
Q

How was disclosure requirements broadened?

A

Now required in secondary market by “Dealers” (brokers, securities dealers).

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13
Q

How long do you have to disclose a Material Event?

A

In a “timely manner” not more than 10 business days after the event.

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14
Q

How might the Material Event deadline prove difficult?

A

It requires 10 days after the event, not 10 days after knowledge of the event.

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15
Q
POST, ON-GOING
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TRUE OR FALSE
---
If a LG reasonably expects the project financed with proceeds of its tax exempt bonds to comply with tax law at the time of issuance no continuing compliance is
legally required.
A

FALSE

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16
Q

Once a LG irrevocably pledges revenues to the payment of its bonds, this pledge can be revoked if:
(a) the bonds are no longer outstanding
(b) the LG replaces revenues with equally credit-worthy payment source
(c) the revenues pledged were state revenues and the state reserved the right to revoke the funding source
(d) (a) and (c)

A
FINANCE - M/C
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D     
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not A.  look for state reservation