BB&T Capital Markets Closes $111,040,000 Financing for International Leadership of Texas

Transaction Summary

On August 27th, 2015, BB&T Capital Markets closed a $105,680,000 Series 2015A Tax-Exempt Fixed Rate Bond Issue and a $5,360,000 Series 2015B Taxable Fixed Rate Bond Issue (collectively, the Series 2015 Bonds) for International Leadership of Texas. Proceeds of the Series 2015 Bonds will be used to finance the cost of the acquisition, improvement, construction, renovation, and equipping of certain educational facilities, classrooms, and administrative spaces in addition to financing open-enrollment charter schools founded in Fort Worth, Garland, and Arlington, Texas and refinancing existing indebtedness. Bond proceeds also provided funds for a debt service reserve fund, capitalized interest, and costs of issuance. The acquired facilities were built-to-suit by the Charter School Fund, and leased by International Leadership of Texas.



Testimonials

It is absolutely incredible the level of professional and detailed planning, coordination and execution that BB&T provided for International Leadership of Texas which resulted in the largest unrated bond sale ever conducted for any charter school anywhere in the United States. I could not have asked for a higher level of leadership than that displayed by Paula Permenter. Let’s get ready for round two!

Edward G. CongerSuperintendent

In my 30 years as a CPA I have seen a number of large transactions. Never have I seen anything like the $111 million bond financing for International Leadership of Texas, an unrated 2 year-old charter school. With Paula Permenter and her team at BB&T leading the way, we were successful in closing the transaction that allowed us to purchase four of our school buildings and save over $800,000 per year in the process.  Paula was instrumental in preparing the ILT team and providing us with the leadership that was required for this major undertaking. Her willingness to go above and beyond for ILT will have us forever in her debt.



Jerry W. McCreightChief Financial Officer

About the Companies

International American Education Federation, Inc. d/b/a International Leadership of Texas (“ILT”), is a nonprofit corporation operating open-enrollment charter schools in Texas. ILT’s primary mission is to prepare  students for exceptional leadership roles in the international community by emphasizing servant leadership, mastering the English, Spanish and Mandarin Chinese Languages and strengthening the body, mind and character of its students. Texas is a strong economic force in the world and its top three countries of export are Mexico, Canada and China. China has become the second largest economy. ILT believes that now, more than ever, it is critical that future generations are prepared for today’s internationally connected world. ILT teaches from a global perspective, where all students graduate with the necessary language and tools needed for future leadership and success. ILT hosts Chinese international students at the Garland High School (with plans of expanding the program to its other high schools), ensuring students not only learn the language, but also better understand the culture and most importantly build meaningful relationships. The school’s goal is to pair one Chinese student to every three American students with the hope that long-term relationships will be formed.

ILT has college preparatory schools which provide students with the instruction needed to be successful in college, with the expectation that they will attend and be successful in college. ILT currently operates nine charter schools on six campuses in three cities and one student dormitory (to house Chinese international students) in the Dallas/Fort Worth area. ILT expects to continue its unprecedented growth by breaking ground in late 2015 and opening a K-8 school in Arlington, a K-8 in Keller, a K-8 and high school in Katy, Texas (Houston area), and a new facility for its currently leased high school in Arlington, Texas for the 2016-2017 school year. ILT made history by being the charter school with the largest enrollment when it opened. ILT’s enrollment grew from 2,500 students in its first year to 5,418 in its third year. At the time of the bond financing, ILT had 6,030 students on its waitlists. ILT’s growth plans include adding even more schools in the Dallas/Fort Worth area by 2020.



Financing Structure

“Unprecedented” is a term that is often used to describe both ILT’s past accomplishments and future plans. ILT opened for the 2013-2014 school year with 2,500 students and has since become the fastest growing charter school system in Texas. This bond issue was the largest non-rated charter school issue in the country.

Some of the facts that gave some investors pause included the schools limited operating history, grand historical growth and ambitious future growth plans. Those concerns were offset by a long list of unprecedented feats and credit strengths including: opening with 2,500 students(the highest enrollment ever for a Texas charter school), receiving a waiver from the Texas Education Agency (“TEA”) to increase the maximum number of students enrolled before the mandatory three year waiting period, enrolling over 5,400 students for their third school year, maintaining over 6,000 students on its waiting list, successfully opening and running multiple campuses, achieving the highest state financial ratings with a perfect 30/30 score (16 is passing), achieving the highest state accountability ratings along with receiving several distinctions, unique academic niche (trilingual program – English, Spanish and Mandarin Chinese), the amount of money the school was going to save by paying debt service versus their escalating leases ($31 million over 30 years), strong student retention, the experienced board and leadership team and strong projected debt service coverage to name a few. ILT was able to secure a true interest cost of 5.72% even during a difficult time in the market when investors were digesting Puerto Rico’s default, Chicago area credit downgrades, and several months of consistent municipal bond outflows.

The bonds were purchased by 14 institutional investors. The institutions consisted of tax-exempt bond funds, privately managed tax-exempt accounts, insurance companies and a hedge fund. In addition to the institutional accounts, there was a retail priority placed on 2 maturities, which helped secure retail bond orders for the school. Two investors who participated that had never bought charter school bonds in the past invested in ILT. Securing this financing for ILT after only two years of operations will allow the school to save facility dollars and continue to grow its system of unique schools.



Education

Our Education Finance Group provides comprehensive capital structure planning and execution for higher education facilities, charter schools, private k-12 schools and public school systems. With a robust bond distribution platform and the resources of one of the nation’s strongest financial institutions, we can serve the needs of the education sector with focus and expert execution.

About BB&T Capital Markets

BB&T Capital Markets offers an integrated platform of equity and debt underwriting, M&A advisory, corporate banking, and sales and trading. Headquartered in Richmond, VA, with offices throughout the US, we have specific expertise within 10 distinct industry verticals including Automotive Aftermarket; Commercial & Industrial; Education; Energy; Financial Services; Food & Agribusiness; Healthcare; Logistics & Transportation Services; Real Estate; and Retail & Consumer. Our commitment to industry expertise, combined with our resources as one of the nation's strongest financial institutions, strategically positions BB&T Capital Markets to build lasting relationships and contribute measurably to the long-term success of our clients.

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