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University of Minnesota to price $85 million G.O.s with $35 million as 'Build America Bonds'
By Aaron Hochman-Zimmerman
New York, April 13 - The University of Minnesota plans to sell $35 million of its upcoming debt financing as Build America Bonds, a fund-raising tool authorized under the America Recovery and Reinvestment Act.
The $35 million will come as part of an $85 million general obligation 20-year offer, expected on Wednesday, according to university spokeswoman Patty Mattern.
Build America Bonds are taxable bonds which may take the place of tax-exempt bonds in cases when federal subsidies are offered to cover lending costs. In exchange, the Treasury Department will pay the university 35% of each interest payment for the 20-year life of the bonds.
The University of Minnesota is the first university to issue bonds under the ARRP and the program is expected to save the university approximately $2 million in borrowing costs over the life of the bonds, Carole Fleck, debt management director for the University of Minnesota Board of Regents, said in a news release.
Wells Fargo Brokerage Services and Wachovia Securities will act as underwriters for the negotiated issue.
Proceeds from the sale will be used for the acquisition and maintenance of school land and facilities.
The main campus is located in Minneapolis.
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