1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
KERR COUNTY COMMISSIONERS COURT
Special Session
Friday, February 4, 2005
3:00 p.m.
Commissioners' Courtroom
Kerr County Courthouse
Kerrville, Texas
Reconvened from Thursday, February 3, 2005
PAT TINLEY, Kerr County Judge
H.A. "BUSTER" BALDWIN, Commissioner Pct. 1
WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2
JONATHAN LETZ, Commissioner Pct. 3
DAVE NICHOLSON, Commissioner Pct. 4
n
O
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
2
I N D E X
February 4, 2005
1.1 Order authorizing the Issuance, Sale and Delivery
of "Kerr County, Texas Certificates of Obligation,
Series 2005", providing for the future authorization
of the levy of an annual ad valorem tax to secure
the payment thereof; approving and authorizing the
execution of all instruments and procedures related
thereto including a Paying Agent/Registrar Agreement
and a Purchase Agreement; approving the form of an
Official Statement; and providing for an immediate
effective date
1.2 Consider and discuss authorizing County Judge to
execute any and all necessary documents on behalf
of Kerr County to complete the purchase of the
Juvenile Detention Facility and issuance and sale
of Certificates of Obligation, delivery of funds
to existing bondholders, and obtaining any necessary
or required releases from bondholders, trustee(s)
and/or others
Adjourned
PAGE
3
16
19
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
3
On Friday, February 4, 2005, at 3:00 p.m., the
February 3rd, 2005 special meeting of the Kerr County
Commissioners Court was reconvened in the Commissioners'
Courtroom, Kerr County Courthouse, Kerrville, Texas, and the
following proceedings were had in open court:
P R O C E E D I N G S
JUDGE TINLEY: Let me reconvene the -- the
Commissioners Court meeting that was recessed at
approximately 3:45, I believe, yesterday afternoon, and was
recessed until 3 o'clock this afternoon. It is a bit past
that time now. The items that are on the agenda for today's
consideration, I -- I've been advised a little over an hour
ago -- about an hour and 15 minutes ago that Mr. Noel Valdez
with the bond counsel firm of McCall, Parkhurst, and Horton
is en route, together with a representative from RBC Dain
Rauscher, the County's financial adviser. They should be
here momentarily with reference to the agenda items that we
have here today. But let me go ahead and first call the
first item. Order authorizing the issuance, sale, and
delivery of Kerr County, Texas Certificates of Obligation,
Series 2005, providing for the future authorization of a
levy of an annual ad valorem tax to secure the payment
thereof, approving and authorizing the execution of all
instruments and procedures relating thereto, including a
Paying Agent/Registrar Agreement and a Purchase Agreement,
2-4-05
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
4
approving the form of the Official Statement, and providing
for immediate effective date. I do note that we do have a
public participation form by a citizen who wishes to speak,
I presume, on this item. It relates to the Juvenile
Detention Facility. Ms. Claudell Kercheville.
MS. KERCHEVILLE: Yes, sir.
JUDGE TINLEY: Would you -- if you'd come
forward and identify yourself by name and address to the
reporter, and --
MS. KERCHEVILLE: My name is Claudell
Kercheville, K-e-r-c-h-e-v-i-1-1-e. I reside at 118 Hilltop
Drive in Kerrville, Kerr County, Texas. That's District 2.
Your Honor, I do -- I would -- I come this afternoon with
questions. I have followed this -- the discussion in the --
and the information that's in the newspapers. I've followed
this very closely, and I've taken a very keen interest in
it. And I decided that since I saw that -- I thought it was
a foregone conclusion, and then I saw yesterday that it was
delayed because -- as I understand, because of not securing
all the signatures that would indemnify the County. I
believe that's maybe the correct term. But I come with some
questions today that I'd like maybe you all to answer for
me, and if it's not appropriate, maybe I could -- you could
get back with me with the answers. May I state my
questions, please? I notice that there is recent reference
2-9-05
5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
to the operating losses. That was not brought out
initially. It was, you know, "We're going to buy this,"
and, you know, it's an operating facility, and it operates
at -- I guess at near break-even point or something. And
there had been recent references to the operating losses.
And these are my questions, please. How many
new employees are we adding to the County payroll, and what
are the estimated costs, including their benefits? What are
the -- what will be the projected rate of interest on the
proposed bonds? I know that probably those -- that maybe is
a negotiated rate, but in view of the downgrading of our
bond rating, I wondered if we might not have to pay a
premium rate for those. And I wondered if, also, referring
to the operating losses, I think concerning Mr. Letz' --
your comments that were in -- quoted in yesterday's paper
about the -- that it would be near or break-even, I think,
or something, that -- something projected in that way. But
how will the losses be covered, and were they included in
the 2005 budget? And how will we pay those? And are the --
will the sale of the bonds include the -- that deficit
amount? And those are my questions, and I just feel like
that the citizens maybe deserve and would like to hear more
concerning these particular issues. Thank you, sir.
COMMISSIONER LETZ: If I may make just a
general comment, we generally don't get into dialogue and
2-4-OS
1
2
3
4
5
6
7
8
9
10
11
12
-~- 13
14
15
16
17
18
19
20
21
22
23
24
25
6
answer questions in this format.
MS. KERCHEVILLE: Okay.
COMMISSIONER LETZ: It's just difficult for
us, but I'll be glad to meet with you after the meeting, and
I can go over my comments. And --
MS. KERCHEVILLE: Okay. Well, maybe --
sometimes you might be misquoted, but I think you were the
one that he referenced the remarks to, sir.
COMMISSIONER LETZ: I haven't read the paper
today, so I'm not sure what they said I -- what they say I
said this time.
MS. KERCHEVILLE: Well, the San Antonio paper
gives a little bit more concise information than the
Kerrville paper does. They give a little bit more in-depth
information.
JUDGE TINLEY: All right. I think we've got
with us representatives from RBC Dain Rauscher and --
MR. VALDEZ: Noel Valdez.
JUDGE TINLEY: -- McCall Parkhurst, and this
is Mr. Valdez who just came in the door, and this is
Mr. Dusty Traylor with RBC Dain Rauscher. I've called the
agenda item for the order authorizing the issuance, sale,
and delivery of the Kerr County, Texas Certificates of
Obligation, Series 2005, and if you gentlemen would be kind
enough to report to the Court where we are at this juncture,
2-4-05
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
7
I think we can move on.
MR. VALDEZ: I'll be happy to do so. I --
once again, for the record, my name's Noel Valdez with the
law firm of McCall, Parkhurst, and Horton. I apologize that
Tom can't be here today. He's flying in from Phoenix, but
I've been in conversations with him this afternoon, this
morning, and he's been in conversation with trustee's
counsel, and also counsel to the bondholders. We received
this morning -- we've received all signature fax -- faxed
signature pages to the Consent and Release Agreement, and
we've released -- and we have also received a signature page
from the trustee signing the release agreement. The only
thing I would say is, there's one bondholder, Citigroup,
where Bank of New York is holding the bonds in trust for
Citigroup, but Citigroup has authorized Bank of New York, as
trustee, to sign the release agreement.
So, with that, we have all signatures to the
Consent and Release Agreement. Having known that -- and
this morning, we -- we had conversations with the Judge,
went into the market, priced the bonds. At this particular
juncture, Dusty's going to give you some information on how
that pricing went, and then up for your consideration will
be the -- the approval and sale of the certificates. And
I'll be happy to explain that order, and then there's going
to be a second process wherein you would also approve the
2-q-os
8
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
tax, but that would be at a separate meeting. And I'll be
happy to discuss those details. But I will, unless you have
any other questions for me at this point, turn it over to
Dusty to let you know how that pricing went.
JUDGE TINLEY: Thank you, Mr. Valdez.
Mr. Traylor?
MR. TRAYLOR: Thank you, Judge,
Commissioners. For the record, again, my name is Dusty
Traylor with RBC Dain Rauscher Incorporated, and Bob
Henderson has been in New Mexico for most of the week and
sends his regards; he could not attend today. With the
information that we received today that all of the
bondholders had approved the Consent and Release Agreement,
we went forth and instructed the underwriters to place the
bonds in the bond market today. They were able to do that
at -- at negotiated rates of interest and were in the market
for about an hour and a half, and then their orders came
back to us, and said that they had completed the
underwriting process and had a deal in-hand for us. And
it's my -- my privilege to be here today to present that
deal for your approval for the Court.
They went forth and sold Certificates of
Obligation, Series 2005, in the par amount of $2 million for
the County. This would leave 1.9 million available, as --
as agreed upon earlier, for the Kerr County Juvenile
2-4-05
9
1
2
3
4
5
6
7
8
9
10
11
12
--~ 13
14
15
16
17
18
19
20
21
22
23
~'~ 2 4
25
Detention Facility Corporation. The interest rate on these
bonds, the true interest cost is 5.25 percent. And you've
got to realize that in that 5.25 percent, that also includes
costs of issuance. If we were to just look at this thing
based upon the -- just the interest rates on the bonds
themselves as they're issued, that interest rate comes out
to 3.41 percent. Basically, what happens when you issue
bonds, all the costs of issuance get lumped in. They have
to be part of the interest costs as it's -- as it's
calculated, but the true interest cost without those is
3.419 percent. These bonds go out from year 2006; they
mature in 2006 through 2010. We feel like with the -- the
underlying rating of these bonds were sold with the
underlying rating of the County, which is an A3 from
Moody's. That is a very good deal on these rates for the
County to accept these terms.
COMMISSIONER WILLIAMS: First coupon is due
when?
MR. TRAYLOR: 2006.
COMMISSIONER WILLIAMS: 2006.
MR. TRAYLOR: Yes, sir.
COMMISSIONER LETZ: Do you recall what the --
the old $5 million debt, what the rate of those bonds was?
MR. TRAYLOR: I do not know. I do not recall
exactly what the overall percentage rate was. Those bonds,
2-4-05
10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
I know, went out to 2022, something like that, and those
bonds had an interest rate -- the bonds in 2022 had an
interest rate of, you know, 5 and a half percent, 5 and a
quarter percent, something in that area. But this structure
is much shorter than this structure. It's kind of not
really an apples-to-apples comparison. I --
COMMISSIONER BALDWIN: Mr. Traylor, would you
explain to me what cost of issuance is and what all that
t
entails?
MR. TRAYLOR: Yes, sir. When bonds get sold
on the bond market, the -- there has to be some costs set
aside, some money set aside to help pay for selling of those
bonds. It's just like when you have retail stockbrokers and
you go to sell your stocks or bonds in your portfolio, they
keep a portion of the proceeds of the sale of those.
Those --
COMMISSIONER BALDWIN: Is that your firm?
MR. TRAYLOR: That's not our firm that's --
that's doing this. Southwest Securities is the underwriter
on this deal.
COMMISSIONER BALDWIN: Okay.
MR. TRAYLOR: And they are keeping a portion
of those for the sale of the bonds. You know, there are
other fees that go along with any bond transaction. There
are fees for our firm. There are fees for Mr. Valdez' firm,
2-4-05
11
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
~- 2 4
25
McCall, Parkhurst, and Horton. Those are also included in
the transaction. But --
COMMISSIONER BALDWIN: Okay.
MR. TRAYLOR: So, you have fees for the
underwriters, fees for the rating agency, fees for our firm,
fees for Mr. Valdez' firm, as well as printing costs, things
like that.
COMMISSIONER BALDWIN: Okay, thank you.
COMMISSIONER WILLIAMS: Do we understand
correctly that there is no bond insurance required of Kerr
County?
MR. TRAYLOR: Mr. Williams, that is correct,
there is no bond -- there is no bond insurance on these --
these bonds. These bonds are backed by the County's credit.
COMMISSIONER WILLIAMS:
COMMISSIONER NICHOLSON:
knows the answer to this question, but
million and we're spending $1.9 millio
Where's the other 100,000 go?
MR. TRAYLOR: Yes, sir.
goes to the costs of issuance.
Thank you.
I don't know who
we're borrowing $2
n to the bondholders.
That -- that money
MR. VALDEZ: And I would say there's also a
portion of that money that's going to title insurance and --
MR. TRAYLOR: That's correct.
MR. VALDEZ: -- and also payment of
2-4-OS
12
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
attorney's fees having to da the with the real estate
transaction.
MR. TRAYLOR: That's correct.
COMMISSIONER NICHOLSON: Closing costs?
JUDGE TINLEY: Yeah. All of these costs that
you're talking about are just the normal affiliated costs
for transactions of this type.
MR. TRAYLOR: Every one of these costs, with
the exception of some of these real estate costs built in
here, are -- are usual and normal costs of any bond
transaction that you would do. Whether you were doing this
type of bond transaction, or if you were doing a
transaction -- or if you were setting new streets and
drainage, these are all usual and normal costs.
JUDGE TINLEY: The real estate costs are
involved because we're going to be transferring a piece of
real estate.
MR. TRAYLOR: Absolutely. Yes, sir.
JUDGE TINLEY: Okay.
COMMISSIONER WILLIAMS: Well, I don't know
for certain, but I'm pretty sure I recollect that this rate,
3.419, is better than the rate that the $5 million was
struck on.
MR. TRAYLOR: I would have to agree that this
rate is -- is a lower rate than the $5 million was struck
2-9-05
13
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
on. However, it's not necessarily an apples-to-apples
comparison.
COMMISSIONER WILLIAMS: I understand. The
term is shorter.
MR. TRAYLOR: Yes, sir, you are correct.
JUDGE TINLEY: Any other questions for
Mr. Traylor? Okay. Thank you, Mr. Traylor.
MR. TRAYLOR: Thank you, Judge.
JUDGE TINLEY: With respect to this
particular agenda item, do you have anything further for us,
Mr. Valdez?
MR. VALDEZ: Yes. I would just add that what
you will be considering right now is the -- the authorizing
of the sale and delivery of the bonds, authorizing the
signing of the purchase contract. I've been in
conversations with underwriter's counsel, so that they're
well aware of -- of the recess and reconvening today, and
they're fine. However, the actual tax levy to pay the
certificates of obligation will not be considered until
February 14th at your regular term, as required by state
law.
COMMISSIONER WILLIAMS: Need a motion, Judge?
JUDGE TINLEY: Well, if we're going to go
forward, we're going to have to have a motion.
COMMISSIONER WILLIAMS: I would move that
2-4-05
14
1
2
3
4
5
6
7
8
9
10
11
12
..-. 13
~~.
14
15
16
17
18
19
20
21
22
23
24
25
Commissioners Court authorize the issuance, sale, and
delivery of Kerr County, Texas Certificates of Obligation,
Series 2005, providing for the future authorization of a
levy of an annual ad valorem tax to secure the payment
thereof, approval and authorizing the execution of all
instruments and procedures related thereto, including a
Paying Agent/Registrar Agreement and a Purchase Agreement,
approving the form and official statement, and providing for
the immediate effective date. And do we need authorization
for the County Judge to sign necessary documents on that?
JUDGE TINLEY: Certainly wouldn't hurt, but
there's a separate --
COMMISSIONER WILLIAMS: There's a second one.
So, do you want them separate, or do you want them together?
JUDGE TINLEY: Separately is fine.
COMMISSIONER WILLIAMS: Okay. I -- that's
the first motion.
JUDGE TINLEY: Okay.
COMMISSIONER LETZ: Second.
JUDGE TINLEY: Motion made and seconded for
approval of the agenda item as stated. Any questions or
discussion on the motion?
COMMISSIONER BALDWIN: I have a question.
Judge, do you have all of the signatures in-hand?
JUDGE TINLEY: I do not personally. It's my
2-4-05
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
15
understanding our counsel that's been handling this
transaction for us does, or at least facsimile copies; that
we anticipate --
MR. VALDEZ: I have with me signature pages
from all the bondholders, and the trustee's signature. The
only exception is that one bondholder who trustee's counsel
has assured Tom Spurgeon that he does have a written -- a
written document accepting the release and directing Bank of
New York, as its trustee, to sign the release.
JUDGE TINLEY: Okay.
COMMISSIONER BALDWIN: So you have one lawyer
promising another lawyer that's promising us. But,
whatever. That's good, if you're happy.
JUDGE TINLEY: Mr. Spurgeon was -- was
satisfied to go into the marketplace.
MR. VALDEZ: And I think that most of the
concern -- and, you know, I'm -- just from my observation,
has been with the trustee signing off on -- on the
transaction. And I will say that I do have trustee's
signature with me agreeing to the consent.
JUDGE TINLEY: Okay. Anything further? All
in favor of the motion, signify by raising your right hand.
(Commissioners Williams and Letz voted in
favor of the motion.}
JUDGE TINLEY: All opposed?
2-4-G5
16
1
2
3
4
5
6
7
8
9
10
11
12
~~^ 13
14
15
16
17
18
19
20
21
22
23
'"~' 2 4
25
(Commissioners Baldwin and Nicholson voted
against the motion.)
JUDGE TINLEY: Chair votes in favor of the
motion. The motion passes. The next item of business is
consider and discuss authorizing the County Judge to execute
any and all necessary documents on behalf of Kerr County to
complete the purchase of the Juvenile Detention Facility and
issuance of sale of Certificates of Obligation, delivery of
funds to existing bondholders, and obtaining any necessary!
required releases from bondholders, trustees, and/or others.
I put this matter on the agenda as kind of a catch-all.
Oftentimes there are various and sundry documents, as I'm
sure the County Attorney can verify, that are involved with
transactions that have to be executed in connection with
these transactions, and that was merely to avoid having to
come back to the Court in the event those come up and have
to be signed. It would be collateral, of course.
COMMISSIONER LETZ: I don't see that all of
that is necessary, the way I read it.
JUDGE TINLEY: Okay.
COMMISSIONER BALDWIN: You're joking.
COMMISSIONER LETZ: Well, I mean, it seems
that we -- I don't know what you're going to have to sign
related to the releases from bondholders. They're signing
the releases of bondholders. And I have no problem with any
2-4-05
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
~° 2 4
25
17
document related to purchasing -- completing the purchase of
the Juvenile Detention Facility and issuance of Certificates
of Obligation, delivery of funds, but the release part I
don't see. And I'd like to keep it as limited as possible
so that if we -- if there are some other things that need to
be done, the full Court decides on them. So, I'll make a
motion to authorize the County Judge to execute any and all
necessary documents on behalf of Kerr County to complete the
purchase of the Juvenile Detention Facility and issuance and
sales of Certificates of Obligation, delivery of funds to
existing bondholders. That's it.
COMMISSIONER WILLIAMS: Second.
JUDGE TINLEY: Motion made and seconded as
indicated. Any question or discussion? All in favor of the
motion, signify by raising your right hand.
(Commissioners Williams and Letz voted in
favor of the motion.)
JUDGE TINLEY: All opposed?
COMMISSIONER BALDWIN: No.
(Commissioners Baldwin and Nicholson voted
against the motion.)
JUDGE TINLEY: Chair votes in favor of the
motion. The motion passes. Anything further, gentlemen?
COMMISSIONER WILLIAMS: Just -- Claudell, if
you'll join us back here after court, we'd be happy to
address your questions.
2-9-05
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
18
MS. KERCHEVILLE: Thank you.
COMMISSIONER BALDWIN: Judge, I just want to
say that it's my opinion you've done the wrong thing.
However, I'm a team player, and now that the majority of
this Court has spoken, I'm on board and I'll do everything
in my power to make this thing work.
COMMISSIONER NICHOLSON: As will I.
COMMISSIONER WILLIAMS: And, just a footnote.
You probably all received an e-mail -- at least you should
have received an e-mail yesterday from Ms. Harris confirming
that she did, in fact, have a meeting which I assisted in
setting up with Bexar County, and Bexar County is going to
resume -- or renegotiate its agreement with Kerr County to
send its juveniles here. And the Bexar County delegation,
which is one Commissioner Larson, the judge -- the
probation -- juvenile probation judge, and others in the
Probation Department, will be in Kerr County at the facility
for a -- for the graduation on the 11th, I believe. Is that
right, Commissioner?
COMMISSIONER BALDWIN: Friday, the 11th.
COMMISSIONER WILLIAMS: Friday, the 11th.
COMMISSIONER BALDWIN: 10 a.m.
COMMISSIONER WILLIAMS: 10 a.m., to tour the
facility. And their view is to move forward and re -- and
have a new agreement with us in place.
2-4-05
.--.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
19
COMMISSIONER LETZ: Good.
COMMISSIONER WILLIAMS: I think that's good
news.
JUDGE TINLEY: Anything else? We'll stand
adjourned.
(Commissioners Court adjourned at 3:24 p.m.)
STATE OF TEXAS ~
COUNTY OF KERR ~
The above and foregoing is a true and complete
transcription of my stenotype notes taken in my capacity as
County Clerk of the Commissioners Court of Kerr County,
Texas, at the time and place heretofore set forth.
DATED at Kerrville, Texas, this 7th day of February,
2005.
JANNETT PTEPER, Kerr County Clerk
B Y : __ _ ____ __ _ _
Kathy B ik, Deputy County Clerk
Certified Shorthand Reporter
2-4-05
PUBLIC PARTICIPATION FORM
FOR
KERR COUNTS COMMISSIONERS' COURT
~~~05
v
Instructions: Fill out all appropriate blanks. Please print or write legibly. Present to the County
Clerk prior to the time that the Agenda Item (or Items) you wish tQ address are discussed.
Name: ~ ~ !~/'~ `~~~ ~~a~~
Address: ~'U `'~~/;7~~'U'-~~~ .~~'"T
Telephone: ~~~ ~ ~~j ~J
Place of Employment: ~~P ~ , ;~/~ ~PiL/
Employment Telephone: ~~
Do you represent any particular group or organization? Yes ~ No (~'
If you represent a group or organization, please state the name, address and telephone number of
such group or organization.
Which agenda Item (or Items) do you wish to address? ~C c/ ,~ G
Ln general, are you for or against such Agenda Item (or Items)? For Against
1 ~;~~
Si ture
NOTE: This Public Participation Form must be presented to the County Clerk prior to the
time the agenda item(s) are discussed.
Once you reach the podium, please state your name and who/what you represent clearly
for the court reporter to accurately record who you are.
ORDER N0.29020
AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF
CERTIFICATES OF OBLIGATION.
Came to be heard this the 4th day of February 2005 with a motion made by
Commissioner Williams seconded by Commissioner Letz. The Court approved by a vote
of 3-2-0 to order authorizing the issuance, sale and delivery of "Kerr County, Texas
certificates of obligation, series 2005", providing for the future authorization of the levy
of an annual ad valorem tax to secure the payment thereof; approving and authorizing
the execution of all instruments and procedures related thereto including a paying
agent/registrar agreement and a purchase agreement; approving the form of an official
statement ;and providing for an immediate effective date.
ORDER N0.29021
PURCHASE OF JUVENILE DETENTION FACILITY.
Came to be heard this the 4th day of February 2005 with a motion made by
Commissioner Letz seconded by Commissioner Williams. The Court approved by a vote
of 3-2-0 to authorize the County Judge to execute any and all necessary documents on
behalf of Kerr County to complete the purchase of the Juvenile Detention Facility and
issuance and sales of Certificate of Obligation, delivery of funds to existing bondholders.