NEW ISSUE — BOOK ENTRY ONLY
In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law, (i) assuming compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and (ii) interest on, and any profit made on the sale, exchange or other disposition of, the Bonds are exempt from the
Ohio personal income tax, the net income base of the Ohio corporate franchise tax, and municipal and school district income taxes in Ohio. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see ‘‘Tax Matters’’ herein.
$100,000,000
STATE OF OHIO
HIGHER EDUCATIONAL FACILITY REVENUE BONDS
(CASE WESTERN RESERVE UNIVERSITY 2002 PROJECT)
- $64,875,000 Series A
- $35,125,000 Series B
- (Variable Rate)
- (Fixed Rate)
The Series A Bonds and Series B Bonds, when, as and if issued, will be special obligations of the State of Ohio issued by the Ohio
Higher Educational Facility Commission (the ‘‘Commission’’) pursuant to two separate Trust Agreements, dated as of May 15, 2002 (the ‘‘Series A Trust Agreement’’ and ‘‘Series B Trust Agreement’’, respectively), between the Commission and J.P. Morgan Trust Company, National Association (the ‘‘Trustee’’). The Series A Bonds and the Series B Bonds (collectively, the ‘‘Bonds’’) are issued to pay costs of certain educational facilities, as described herein. The Series A Bonds and the Series B Bonds will be payable from the revenue and other money pledged by the Series A Trust Agreement and the Series B Trust Agreement, respectively, which include the payments required to be made by Case Western Reserve University (the ‘‘University’’) under certain Leases between the Commission and
CASE WESTERN RESERVE UNIVERSITY
The Bonds are issuable as registered bonds without coupons and initially will be registered only in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (‘‘DTC’’), which will act as securities depository for the Bonds. The Bonds will be issuable only under the book-entry system maintained by DTC through brokers and dealers who are, or act through, DTC Participants or Indirect Participants, and purchasers of the Bonds will not receive physical delivery of bond certificates. Principal of and premium, if any, on the Bonds will be payable to the registered owner upon presentation and surrender at the designated corporate trust office of the Trustee in Cleveland, Ohio, and interest will be transmitted by the Trustee on each interest payment date to the registered owner as of the record date preceding that interest payment date, all as more fully described herein.
The Series A Bonds may bear interest at a Daily Rate, Weekly Rate, Commercial Paper Rate, Dutch Auction Rate or Term Rate.
While a Series A Bond bears interest at any of these rates, such Series A Bonds will be deemed to be in a Daily Rate Period, a Weekly Rate Period, a Commercial Paper Rate Period, a Dutch Auction Rate Period or a Term Rate Period, respectively (each a ‘‘Rate Period’’). Initially, all of the Series A Bonds will be issued in a Daily Rate Period and will remain in that Rate Period until converted to another Rate Period as described herein. Interest on the Series A Bonds, while such Bonds bear interest at the Daily Rate, is payable on the first Business Day of each month, commencing July 1, 2002. While the Series A Bonds bear interest at the Daily Rate, the Series A Bonds will be available to purchasers in denominations of $100,000 and integral multiples of $5,000 in excess thereof.
Interest on the Series B Bonds will be payable on each April 1 and October 1, commencing October 1, 2002. While the Series A Bonds are in a Daily Rate Period, Series A Bondholders will have the right to tender their Series A Bonds for purchase at the times and subject to the conditions set forth in the Series A Trust Agreement. The Bonds also are subject to optional and mandatory redemption prior to maturity and to optional and mandatory tender for purchase as described herein.
In the event and to the extent that the Series A Bonds are not remarketed by the remarketing agent, the Series A Bonds will be purchased pursuant to the terms of a Standby Bond Purchase Agreement, dated as of May 15, 2002 (the ‘‘Initial Liquidity Facility’’),
..
among the University, the Trustee and Landesbank Hessen-Thuringen Girozentrale (the ‘‘Bank’’), subject, however, to the terms and conditions stated therein. The Initial Liquidity Facility will expire on June 3, 2003, unless extended or terminated sooner in accordance with its terms.
The Bonds are offered when, as and if issued by the Commission and accepted by Morgan Stanley & Co. Incorporated, as representative for itself, NatCity Investments, Inc. and McDonald Investments Inc. (collectively, the ‘‘Underwriters’’), subject to the receipt of the approving legal opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel. Certain legal matters will be passed upon for the University by Joel Makee, Esq., as University Counsel, and for the Underwriters by their counsel, Thompson Hine LLP. Public Financial Management, Inc. has served as financial advisor to the University. It is expected that the Bonds will be available for delivery through DTC on or about June 5, 2002.
The Bonds do not represent or constitute a debt or pledge of the faith and credit of the Commission or the State of Ohio and will not be secured by an obligation or pledge of any money raised by taxation, and do not grant to the Holders any rights to have the State levy any taxes or appropriate funds for the payment of the principal of or interest on the Bonds.
MORGAN STANLEY
NATCITY INVESTMENTS, INC.
McDONALD INVESTMENTS INC.
A KeyCorp Company
This cover page contains certain information for quick reference only. It is not a summary of this Offering Circular. Investors must read the entire Offering Circular to obtain information essential to the making of an informed investment decision.
May 28, 2002
Series A Bonds
Dated: Date of delivery Due: October 1, 2031
Price: 100%
Series B Bonds
Dated: May 15, 2002
Due: October 1 as set forth below
Due
October 1
Principal Amount
Interest Rate
Price or Yield
2019 2020 2021 2021 2022 2022
$6,500,000
5,610,000 1,330,000
10,000,000
1,650,000
10,035,000
5.500% 5.500% 5.000% 5.500% 5.125% 5.500%
103.740% 103.252%
5.140%
102.847%
5.180%
102.525%
(plus accrued interest from May 15, 2002)
TABLE OF CONTENTS
Page
INTRODUCTION............................................................................................................................................... 1 THE COMMISSION........................................................................................................................................... 3 THE UNIVERSITY............................................................................................................................................ 3 THE PROJECTS AND USE OF PROCEEDS ................................................................................................... 4 THE BONDS....................................................................................................................................................... 4 SECURITY AND SOURCES OF PAYMENT ................................................................................................ 22 THE GUARANTIES......................................................................................................................................... 24 ENFORCEABILITY OF REMEDIES.............................................................................................................. 25 ABSENCE OF MATERIAL LITIGATION ..................................................................................................... 25 ELIGIBILITY UNDER OHIO LAW FOR INVESTMENT ............................................................................ 26 TAX MATTERS............................................................................................................................................... 26 APPROVAL OF LEGAL PROCEEDINGS ..................................................................................................... 28 RATINGS.......................................................................................................................................................... 28 UNDERWRITING............................................................................................................................................ 29 CONTINUING DISCLOSURE ........................................................................................................................ 29 UNIVERSITY FINANCIAL STATEMENTS ................................................................................................. 31 MISCELLANEOUS.......................................................................................................................................... 31 CONSENT TO DISTRIBUTION ..................................................................................................................... 32 APPENDICES
AB
--
Case Western Reserve University Case Western Reserve University Financial Statements for the Fiscal Year Ended June 30, 2001 (with Independent Auditors’ Report thereon) Certain Defined Terms and Summary of Certain Provisions of the Trust Agreements, the Leases and the Tax Agreements
- C
- -
DEF
---
Summary of Applicable Interest Rates and Other Terms of the Bonds The Bank Proposed Forms of Approving Opinions of Bond Counsel
In connection with this offering, the Underwriters may overallot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.
The Bonds are exempt from registration under the Securities Act of 1933 and from registration under the securities laws of the State of Ohio. No dealer, broker, salesman or other person has been authorized by the Commission, the University or the Underwriters to give any information or to make any representations with respect to the Bonds, other than those contained in this Offering Circular, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Commission, the University or the Underwriters. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any state, possession or territory, in which it is unlawful for such person to make such offer, solicitation or sale. The information contained herein has been obtained from the Commission (with respect to the Commission), the University, the Bank, DTC and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation of the Underwriters. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Offering Circular nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above or any related parties since the date hereof. This Offering Circular is not to be construed as an agreement or contract with the Commission. Capitalized terms used in this Offering Circular and not otherwise defined have the meanings set forth in “CERTAIN DEFINED TERMS AND SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENTS, THE LEASES AND THE TAX AGREEMENTS” in APPENDIX C. All quotations from summaries and explanations of provisions of law and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions.
This Offering Circular has been prepared in connection with the original offering for sale of the Bonds.
FOR NEW HAMPSHIRE RESIDENTS
In making an investment decision investors must rely on their own examination of the University and the terms of the offering, including the merits and risks involved. These securities have not been recommended by any Federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offense.
$100,000,000
STATE OF OHIO
(OHIO HIGHER EDUCATIONAL FACILITY COMMISSION)
HIGHER EDUCATIONAL FACILITY REVENUE BONDS
(CASE WESTERN RESERVE UNIVERSITY 2002 PROJECT)
$64,875,000 Series A
(Variable Rate)
$35,125,000 Series B
(Fixed Rate)
INTRODUCTION
This Offering Circular, including the cover page, the table of contents and the Appendices, is provided to furnish information in connection with the issuance by the Ohio Higher Educational Facility Commission (the “Commission”) of $100,000,000 State of Ohio Higher Educational Facility Revenue Bonds (Case Western Reserve University 2002 Project), Series A and Series B (the “Series A Bonds” and the “Series B Bonds,” respectively, and, collectively, the “Bonds”), consisting of Series A Bonds in the principal amount of $64,875,000 and Series B Bonds in the principal amount of $35,125,000. The Series A Bonds are being issued pursuant to a Trust Agreement, dated as of May 15, 2002 (the “Series A Trust Agreement”), between the Commission and J.P. Morgan Trust Company, National Association, as trustee (the “Trustee”). The Series B Bonds are being issued pursuant to a Trust Agreement, dated as of May 15, 2002 (the “Series B Trust Agreement”), between the Commission and the Trustee. The Series A Bonds will be issued for the purpose of paying costs of certain educational facilities of Case Western Reserve University (the “Series A Project”), costs of issuance of the Series A Bonds and for such other uses as are permitted under the Series A Lease (as defined below) and Chapter 3377 of the Ohio Revised Code (the “Act”). The Series B Bonds will be issued for the purpose of paying costs of certain educational facilities of Case Western Reserve University (the “Series B Project”), costs of issuance of the Series B Bonds and for such other uses as are permitted under the Series B Lease (as defined below) and the Act. See “THE PROJECTS AND USE OF PROCEEDS” herein for a more complete description of the Projects. The Series A Project and the Series B Project will each consist of that portion of the Projects financed through the issuance of the Series A Bonds and the Series B Bonds, respectively.
The Bonds will be dated and mature as set forth on the inside cover page. The Bonds will be subject to redemption prior to maturity as described herein under “THE BONDS – Description of the Series A Bonds – Redemption” and “– Description of the Series B Bonds – Redemption.”
All of the educational facilities constituting the Series A Project and the Series B Project (collectively, the
“Projects”) are located on the Case Western Reserve University (the “University”) campus in Cleveland, Ohio. The Series A Project will be leased by the University to the Commission under the Base Lease, dated as of May 15, 2002 relating to the Series A Bonds (the “Series A Base Lease”). The Series B Project will be leased by the University to the Commission under the Base Lease, dated as of May 15, 2002 relating to the Series B Bonds (the “Series B Base Lease”). The Series A Project will be leased by the Commission to the University pursuant to the Lease, dated as of May 15, 2002, between the Commission and the University relating to the Series A Bonds (the “Series A Lease”). The Series B Project will be leased by the Commission to the University pursuant to the Lease, dated as of May 15, 2002, between the Commission and the University relating to the Series B Bonds (the “Series B Lease”). The University is required by the Series A Lease and the Series B Lease (collectively, the “Leases”) to make payments equal to the principal of and premium, if any, and interest on the respective series of Bonds, whether at maturity, upon acceleration or upon redemption (the “Bond Service Charges”). Bond Service Charges on the Series A Bonds will be required to be made by the University as rental payments (the “Series A Rental Payments”) under the Series A Lease. Bond Service Charges on the Series B Bonds will be required to be made by the University as rental payments (the “Series B Rental Payments”) under the Series B Lease. In the Leases, the University has agreed to purchase the Commission’s interest in the Projects after all of the Bond Service Charges have been paid.
1
Upon the issuance of the Series A Bonds, the University, the Trustee and Landesbank Hessen-Thüringen
Girozentrale, acting through its New York Branch (the “Bank”), will enter into a Standby Bond Purchase Agreement, dated as of May 15, 2002 (the “Initial Liquidity Facility”), pursuant to which the Bank will agree, in certain circumstances, to purchase the Series A Bonds bearing interest at a Daily Rate or a Weekly Rate that are tendered or deemed tendered by the owners thereof for purchase pursuant to the Series A Trust Agreement and not remarketed by Morgan Stanley & Co. Incorporated, as remarketing agent (the “Remarketing Agent”). The Initial Liquidity Facility expires on June 3, 2003, unless extended or terminated in accordance with its terms. The term “Liquidity Provider” in this Offering Circular refers to the Bank during the period that the Initial Liquidity Facility is in effect. The Liquidity Facility (as defined below) does not secure payment of the principal of, premium, if any, and interest on the Series A Bonds. See “THE BONDS – Description of the Series A Bonds – Liquidity Facility” herein.
Under certain circumstances described in the Series A Trust Agreement, the Initial Liquidity Facility may be replaced by an alternate liquidity facility (such as a letter of credit, a line of credit or a bond purchase agreement) supporting payment of the purchase price of tendered or deemed tendered Series A Bonds (an “Alternate Liquidity Facility”). The delivery of an Alternate Liquidity Facility will result in the mandatory tender of the Series A Bonds, unless each Rating Service confirms in writing that the then current rating on the Series A Bonds will not be reduced or withdrawn as the result of the delivery of such Alternate Liquidity Facility. The Initial Liquidity Facility and any Alternate Liquidity Facility are referred to collectively in this Offering Circular as the “Liquidity Facility.” Under certain circumstances described in the Series A Trust Agreement, the University may discontinue use of a Liquidity Facility. See “THE BONDS – Description of the Series A Bonds – Mandatory Tender” and “– Alternate Liquidity Facilities.”
The Bonds are special obligations of the State of Ohio (the “State”) and the Bond Service Charges on the Bonds will be payable from revenues to be derived by the Commission from its ownership of the Projects, including the Series A Rental Payments with respect to the Series A Bonds, the Series B Rental Payments with respect to the Series B Bonds and certain other amounts, all as provided in the Series A Lease, the Series B Lease, the Series A Trust Agreement and the Series B Trust Agreement and as hereinafter described under “SECURITY AND SOURCES OF PAYMENT.”
The Series A Bonds are secured by the Series A Trust Agreement, which grants to the Trustee a security interest in the Series A Revenues as described herein under “SECURITY AND SOURCES OF PAYMENT.” The Series A Bonds are further secured by the Guaranty Agreement, dated as of May 15, 2002, between the University and the Trustee relating to the Series A Bonds (the “Series A Guaranty”) by which the University unconditionally guarantees the payment of the Bond Service Charges on the Series A Bonds as described herein under “THE GUARANTIES.”
The Series B Bonds are secured by the Series B Trust Agreement, which grants to the Trustee a security interest in the Series B Revenues as described herein under “SECURITY AND SOURCES OF PAYMENT.” The Series B Bonds are further secured by the Guaranty Agreement, dated as of May 15, 2002, between the University and the Trustee relating to the Series B Bonds (the “Series B Guaranty”) by which the University unconditionally guarantees the payment of the Bond Service Charges on the Series B Bonds as described herein under “THE GUARANTIES.”
Brief descriptions of the Commission, the University, the Projects, the Bonds, the Leases, the Series A
Trust Agreement and the Series B Trust Agreement (collectively, the “Trust Agreements”), and the Series A Guaranty and the Series B Guaranty (collectively, the “Guaranties”) are included in this Offering Circular. The descriptions herein of the Bonds, the Leases, the Trust Agreements and the Guaranties are qualified in their entirety by reference to each such document. The description of the University consists of certain information and data provided by it (as set forth in Appendix A) and certain of its audited consolidated financial statements (as set forth in Appendix B). All descriptions are further qualified in their entirety by reference to laws and principles of equity relating to or affecting generally the enforcement of creditors’ rights. Copies of the above described documents are available for inspection during the initial offering period at the principal office of Morgan Stanley & Co. Incorporated, 1221 Avenue of the Americas, 30th Floor, New York, New York 10020, the principal office