Memorandum
City of Lawrence
Legal Department
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TO: |
David L. Corliss, City Manager |
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FROM: |
Toni Wheeler, Director of the Legal Department Gina Riekhof, Gilmore & Bell |
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DATE: |
November 17, 2011 |
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RE: |
December 6, 2011 City Commission Agenda Item Conveyance of Property related to Industrial Revenue Bonds issued in 1967 and 1976 for B.F. Goodrich/TRW Inc./Camco Incorporated
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Background
The City previously issued its Industrial Revenue Bonds, B.F. Goodrich Project, Series December 1, 1967, in the aggregate original principal amount of $3,700,000 (the “Series 1967 Bonds”) and its Industrial Revenue Bonds, Series of January 1, 1976 (TRW Inc. Project) in the aggregate original principal amount of $1,000,000 (the Series 1976 Bonds, and together with the Series 1967 Bonds, the “Bonds”) to acquire, construct and equip certain property. Pursuant to the Lease Agreements entered into in connection with issuance of the Bonds, the Lessee has the right to purchase the property financed with the Bonds upon payment in full of the bonds.
Schlumberger Technology Corporation has certified to the City that it is the successor to B.F. Goodrich and TRW Inc. Schlumberger Technology Corporation has also certified that the Bonds have been paid in full, and wishes to exercise the purchase option provided in the Lease Agreements.
Due to the amount of time that has lapsed since the stated maturity of the Bonds and the fact that no assignments were recorded between TRW Inc. (or its successors) and Schlumberger Technology Corporation (“STC”), the City has not been able to independently confirm with the Trustee for the Bonds that the Series 1967 Bonds have been paid in full. Similarly, the City has not been able to independently confirm that STC is the appropriate successor to TRW Inc. To satisfy the City that STC is entitled to exercise the purchase option under the Lease, STC has provided to the City an Indemnity Agreement, agreeing to indemnify the City for any loss sustained from improper transfer of the project to STC. STC currently has investment grade ratings from both Standard & Poor’s and Moody’s rating agencies, so bond counsel and staff are satisfied that the Indemnity Agreement is sufficiently valuable to protect the City’s interests.
The attached Resolution authorizes the Mayor and Clerk to execute a Deed, Bill of Sale and Termination of Lease Agreement, transferring all interest in the property financed with the Bonds to Schlumberger Technology Corporation.
Staff Recommendation
Staff recommends approval of the attached resolution.
Action Requested
Pass resolution 6959 authorizing the Mayor and Clerk to execute a Deed, Bill of Sale and Termination of Lease Agreement, and to take all other actions necessary to transfer to the project to the Schlumberger Technology Corporation, terminate all interest of the City in the project and carry out the intent of the resolution.
Attachments: Resolution No. 6959
Termination of Lease Agreement