BENTONVILLE -- The Bentonville School District's recent bond sale resulted in $7 million more than expected.
The district bid out $198 million worth of refunding and construction bonds, the largest bond issue ever by an Arkansas school district, said Scott Beardsley of First Security Beardsley, a Little Rock firm that works with the district on financial matters.
The bond issue will refinance existing debt from three previous bond issues and provide $16 million for an elementary school.
Wells Fargo Bank, the winning bidder, structured its bid in such a way that the district will end up with $23.2 million in its bank account at the end of this month, Beardsley told the School Board at its meeting Monday.
Instead of taking 2 percent of the amount of the bonds as the bank's profit -- about $3.8 million in this case -- Wells Fargo agreed to take $500,000 to make its bid more attractive. Wells Fargo also included a cash premium of $3.7 million for the district, Beardsley said. The unexpected gain amounted to $7 million for the district.
"That's very good news," said Travis Riggs, board president.
It will be up to the board and district administrators to decide whether to spend that money on capital projects or to invest it and reduce the amount of money borrowed in the future, Beardsley said.
The district assumed an interest rate of 4.5 percent when plans began to take shape for the bond issue in fall 2016. Given Wells Fargo's bid, the district's payments will be $700,000 to $800,000 less per year than projected, Beardsley said.
Five institutions bid on the bonds March 1. Wells Fargo submitted the lowest interest rate of 3.659 percent, according to district documents. Raymond James and Associates had the second-best bid of 3.6593 percent.
All five bids were submitted less than one minute before the deadline, Beardsley said.
"So we had a lot of interest in the bonds, a lot of great competition," he said.
Metro on 03/11/2018