The Gateway School of New York and Gateway Middle School (collectively, the “School”) are not for profit institutions that provide instruction, recreation and socialization programs and facilities for learning disabled children ages 5-12.
The School sought to (i) refinance an outstanding tax-exempt revenue bond and certain other conventional credit facilities and (ii) finance capital improvements to its facilities.
Solution and Execution
GATES Capital was engaged by the School to structure and underwrite a $22.425 million financing consisting of a tax exempt bond, taxable bond, mortgage note and line of credit. GATES Capital’s financing strategy was to approach select banks and bond buyers with the expertise to understand the plan of finance that combined tax exempt / taxable bonds with New Market Tax Credits.
Gateway realized a number of benefits from the financing including: significant debt service savings, preservation of mortgage recording tax benefit, no prepayment penalty, removal of bullet payment refinance risk, flexibility via a multi-modal bond and bonds redeemed at a discount.
To realize these benefits, GATES Capital took part in numerous talks and negotiations on behalf of Gateway including: intercreditor and subordination agreements with New Market Tax Credit lenders, bond discount, multi-purpose bond allocation, covenant, lending limit and hedge discussions.