LIPA Announces Plan to Convert $293.6 million of Auction Rate Securities
Uniondale, NY – April 22, 2008 – As a further step in addressing the
market-wide issues in the auction rate securities market, LIPA announced its
plans late last week to convert seven series of its 2003 bonds which are
currently in auction mode to weekly variable rate demand bonds. The following
bonds will be converted on the corresponding date:
| Series |
CUSIP |
Total Par
Outstanding |
Conversion Date |
| 2003I |
542690VV1 |
$65,600,000.00 |
May 9, 2008 |
| 2003J |
542690WD0 |
$47,000,000.00 |
May 5, 2008 |
| 2003K |
542690VX7 |
$47,000,000.00 |
May 5, 2008 |
| 2003L |
542690WA6 |
$47,000,000.00 |
May 7, 2008 |
| 2003M |
542690WC2 |
$20,000,000.00 |
May 8, 2008 |
| 2003N |
542690VW9 |
$47,000,000.00 |
May 6, 2008 |
| 2003O |
542690VN9 |
$20,000,000.00 |
May 8, 2008 |
| |
|
|
Total Par Value
to be Converted |
$293,600,000.00 |
In accordance with the requirements of these bonds, all bonds being converted
are subject to mandatory tender and the bondholders of record will be provided
instructions as to the proper handling of their bonds for redemption.
On February 12, 2008, LIPA, as well as other municipal issuers of insured
auction rate securities, began to experience “failed auctions” as a result of
the market’s growing concern over the various municipal bond insurers. The
auction market has yet to correct this situation which is market-wide and is in
no way a reflection of LIPA’s creditworthiness.
LIPA had previously redeemed four series of 2001 auction rate securities
totaling $200 million insured by XL Capital using available liquidity.
LIPA continues to evaluate its options available with respect to its
remaining insured variable rate bonds. “The conversion of the 2003I-O bonds
represents the next step in the process of addressing LIPA’s exposure to insured
variable rate bonds” said Elizabeth McCarthy, Senior Vice President and Chief
Financial Officer. “We will continue to evaluate our portfolio of auction rate
securities in the current challenging and volatile credit market situation to
determine the best alternatives for the portfolio.” |
