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O.C. Sets Lineup of Firms to Handle Debt Refi

Supervisors approve five brokers to manage the deal and help the county shed its 1994 bankruptcy burden 10 years ahead of schedule.

June 08, 2005|David Reyes | Times Staff Writer

The Orange County Board of Supervisors on Tuesday approved the five investment firms that will refinance the remaining $600 million of the county's 1994 bankruptcy debt, helping the county pay it off by 2016, 10 years ahead of schedule.

Tuesday's decision could mean as much as $1.6 million in brokerage fees to be shared among the five firms, including Goldman Sachs, Citigroup and Morgan Stanley, which will manage the transaction, and Banc of America Securities and Stone & Youngberg, which will manage the restructuring of the debt.

"This vote is one of the most important votes I will make as a supervisor," said Supervisor Lou Correa. "This would finally put to bed the Orange County bankruptcy."

Before the vote, Correa and Board Chairman Bill Campbell expressed dissatisfaction with county public finance manager Thomas Beckett, who bypassed competitive bids for the jobs and limited recommendations to only four firms, which prompted supervisors to add Morgan Stanley to the list.

"I'm shocked that we wouldn't have a total package [of information]," Campbell said. "And it comes when you want us to vote on something and there's a lot we don't know about."

Supervisors said Beckett failed to provide them enough information to evaluate the firms.

Beckett said a bidding process would have delayed hiring the firms and reduced the chance of getting a low interest rate.

Beckett told supervisors a panel of top county officials evaluated proposals by 11 investment firms.

Correa, who was an investment banker before winning a assembly seat and later his county supervisor post, added Morgan Stanley to the list.

County Treasurer-Tax Collector John M.W. Moorlach said that in similar transactions at the state level, it was prudent to have more investment firms, and for a debt restructuring the state usually hired "10, sometimes 20 investment firms."

"This only makes for good relations on [Wall] Street," Moorlach said.

The county is expected to complete its refinancing deal in August.

It was the second time in two months that a county official was taken to task.

Last week, Chief Information Officer Dan Hatton announced his resignation after he was reprimanded by supervisors for failing to warn them of a $2.8-million computer leasing bill the county faced because its data processing storage was nearly full.

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