Alumni Handle Largest Bond Issuance in the State
Two former Georgia State Law classmates, Andrew Egan (J.D. ’05, M.A. ’06) of Kutak Rock and Jon Pannell (J.D. ’05) of Gray Pannell & Woodward LLP, recently assisted with the largest bond offering ever undertaken by the State of Georgia. Egan served as disclosure counsel and Pannell as bond counsel for the over $1.37 billion issuance.
Money generated from the sale of the bonds will be used for state capital projects that include facility management and rejuvenation, infrastructure maintenance and development and the rebuilding and remodeling of state and local education buildings.
“Representing the state and working with its talented financing and legal team is a great honor for my firm and Jon’s firm,” Egan said.
The bonds were general obligations of the state and backed by its full faith and credit. The bonds were split into four separate issues with four different underwriters buying different series of the bonds. The structure of the bonds was such that interest paid to investors on the majority of the bonds would be exempt from federal income tax. This, coupled with Georgia’s AAA credit rating from all three rating agencies, made the bonds especially attractive to investors, Pannell said.
Part of the bonds were also used for refinancing purposes and allowed the state to take advantage of the market moving in its favor as an effective cost saving measure by refunding older bonds bearing interest at higher rates.
As disclosure counsel, Egan assisted with drafting the official statement (OS), which included financial and statistical information about the state, how the bond proceeds would be used and how the bonds would be paid back. This offering document was then sent into the marketplace to solicit bids for the bonds.
“This offering document is several hundred pages long and is the means by which the bonds are sold to investors. The OS is important because the investor is making a decision to buy the bonds based on the information included in it. Additionally, it is what helps determine the interest rate on the bonds,” Egan said.
Anyone selling bonds on the open market is subject to continuing disclosure, and if the bonds are still outstanding, the issuer has to provide this information on a rolling basis. Egan will assist with this as well.
In his capacity as bond counsel, Pannell advised the state on the structure of the transaction and issued the bond opinion which stated the municipal bonds were exempt from state and federal income tax. Pannell also assisted the attorney general’s office in drafting all of the closing documents which included the actual bonds issued at closing.
He also handled the bond validation and bond validation hearing. The validation of these bonds as tax-exempt greatly increases the value of the bonds to investors and helps the state borrow money at lower interest rates for governmental projects.
“It’s a fun practice, and I get to see the tangible results of my work,” Pannell said.
This is Pannell’s first time in the role as bond counsel for the state, but he has done work for the Georgia Ports Authority in the past. Pannell, who is located in Savannah, was appointed as a special assistant attorney general (SAAG) to serve as bond counsel. Kutak Rock has worked with the state on previous general obligation bond transactions, as well as its financings for single family mortgage bonds and transportation projects.
Additionally, Pannell and Egan worked on another state bond issuance of just under $900 million, which closed in November.
“I enjoy the challenges and complexities involved with public finance. My time at the College of Law, in particular the tax classes I took, have served me well in this practice area,” Egan said.
Before law school, Egan and Pannell met at the University of Georgia. Following undergraduate work, Pannell worked for Trammell Crow Co. as a leasing agent in Atlanta. Egan also received a master’s degree in political science from Georgia State University.
“It is pretty unique that Andrew and I knew each other in undergrad and law school, went our separate ways, and then ended up working together in this highly specialized area of the law on these billion dollar issues for the State of Georgia,” Pannell said.