Repository: UIHistories Project: Board of Trustees Minutes - 1978 [PAGE 579]

EXTRACTED TEXT FROM PAGE:

566

BOARD OF TRUSTEES

[March 15

The vice president for administration has recommended approval of the establishment of the trust fund based on annual actuarial studies as required, and board authorization to execute the trust agreement negotiated with the First National Bank of Chicago for this purpose. Funds are available in the self-insurance fund for the 1977 actuarial funding requirement and assessments for the 1978 requirement are being developed to provide the required funding. I concur. T h e student advisory v o t e w a s : A y e , M i s s Cordon, M r . Overstreet, Miss Winter; no, none. O n m o t i o n of M i s s Cordon, this r e c o m m e n d a t i o n w a s approved a n d authority w a s g i v e n as r e c o m m e n d e d b y t h e following v o t e : A y e , M r . Forsyth, M r . H a h n , M r . H o w a r d , M r . L i v i n g s t o n , M r . N e a l , M r s . R a d e r , Mrs. S h e p h e r d , M r . V e l a s q u e z ; n o , n o n e ; absent, M r . Lenz, Governor Thompson.

Authorization for Advance Re-funding Bond Issue and Selection of Underwriting Management Group

(20) At a meeting of the board as a Committee of the Whole on February 15, 1978, the committee endorsed the concept of an advance re-funding (debt restructuring) plan, encompassing all existing outstanding bonded indebtedness of the University and including the outstanding existing indebtedness on loans of the University of Illinois Foundation on Memorial Stadium and the IntramuralPhysical Education Building. A series of interviews has been conducted with A. G. Becker Municipal Securities, Incorporated, Continental Illinois National Bank & Trust Company, John Nuveen & Co., Inc., and the First National Bank of Chicago to determine the best method of handling advance re-funding bond issues and to determine the potential for establishing a financial management team capable of handling the proposed sale. The interviews produced substantial evidence in support of a planned underwriting over a competitive sale, primarily due to the uniqueness of restructuring the University's current debt. A planned underwriting will allow the University to control both the timing and precision of the restructuring and make the best use of the advantages obtainable from the regulations governing such re-funding issues. It is, therefore, recommended that the University proceed with a planned underwriting for the advance re-funding bond issue, to be jointly managed by four major Chicago banks: Continental Illinois National Bank & Trust Company, the First National Bank, Northern Trust Company, and the Harris Bank. This group was successful in developing a recent planned underwriting advance re-funding sale for Southern Illinois University and is familiar with the approach to be used in structuring a new debt program for the University of Illinois. In order to facilitate the work of the management group, it is also recommended that Continental Bank serve as managing underwriter. Based on the anticipated workloads of the participating managers, it is recommended that the appropriate management fee be divided as follows: Continental Bank 50 percent First National Bank 30 percent Northern Trust 10 percent Harris Bank 10 percent As managing underwriter, the Continental Bank will work with the University and the financial and legal advisers in analyzing, structuring, and developing the terms and conditions to be contained in the bond resolution with respect to the Advance Re-funding Bonds. During the negotiations, the Continental Bank will