Disclosures, re: Post-Issue Ongoing

Question 1

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

Answer 1

No. Must continue to disclose annually.

Question 2

Who is obligated to disclose?

Answer 2

Issuer & any Obligated Person.

Question 3

What is an “Obligated Person”

Answer 3

Anyone contractually bound to support repayment of the debt.
Included: Issuer
Excluded: Insurer.

Question 4

How does Obligated Person become bound to ongoing disclosure?

Answer 4

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

Question 5

What if you don’t disclose?

Answer 5

Shut out of the municipal securities market.

Question 6

What must you disclose?

Answer 6

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

Question 7

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

Answer 7

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

Question 8

A covenant to disclose must contain what 4 items?

Answer 8

(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.

Question 9

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

Answer 9

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

Question 10

State 3 exemptions from annual disclosure.

Answer 10

1- 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.
———–
2- conduit files no 2004 (fees)
————
3- bond anticipation notes.

Question 11

How submit disclosure?

Answer 11

In writing electronically.

Question 12

How was disclosure requirements broadened?

Answer 12

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

Question 13

How long do you have to disclose a Material Event?

Answer 13

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

Question 14

How might the Material Event deadline prove difficult?

Answer 14

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

Question 15

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.

Answer 15

FALSE

Question 16

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)

Answer 16

D
———–
not A. look for state reservation