At a special meeting Friday, the Liquor Control Board approved contracting with financial advisors and legal counsel to pursue entering into a contract that would monetize future earnings of the LCB.
The LCB is pursuing a revenue-backed contract to deliver $1.25 billion in up-front revenue to the General Fund by capitalizing on the LCB’s long-term profitability, at the request of Gov. Tom Wolf.
Through a new statement of work issued under an existing state contract, the LCB will engage Public Financial Management, Inc. to perform financial advisory services to the Board related to the transaction.
The Board will also amend its existing contract with the law firm of Eckert Seamans Cherin & Mellott, LLC to provide for legal representation of the Board in connection with the transaction.
“Today’s action is the first real step in pursuing securitization in support of providing much-needed revenue to balance the state budget,” said Board Chairman Tim Holden. “Now that we have formally engaged experts to guide us through this transaction, we can get to work developing the details and bringing the financing to market.”
“The next few weeks will require a lot of hard work by our newly hired experts and our own team as we develop an offering that will appeal to the financial market as an attractive investment,” said Board Member Michael Newsome. “There’s a great deal of effort and analysis in front of us, but we maintain hope that we could execute a deal by year’s end.”
Both contracts were approved through a split vote.
“Considering the substantial size and length of this financing, my concern with these contracts and the monetization proposal as a whole is the speed with which they have been pursued,” said Board Member Mike Negra, who cast the dissenting vote on both contracts. “I respect the decision of the majority, however, and I will support the agency’s work in developing this transaction.”
Next steps in the process will likely include competitive procurement of underwriters, an action the Board would consider in an upcoming public vote.
NewsClip:
LCB Hires Advisers For Wolf’s $1.25 Billion Borrowing Proposal
NewsClip:
LCB Hires Advisers For Wolf’s $1.25 Billion Borrowing Proposal
