Tobacco Settlement, R.I., gets court OK to issue asset-backed bonds

By Susanna Moon

Chicago, Jan. 21 – The Tobacco Settlement Financing Corp. of Rhode Island said that the Superior Court of the State of Rhode Island and Providence Plantations granted summary judgment on Jan. 15 in favor of the corporation and all other defendants in the claims against them.

As a result, the corporation said it expects to proceed to issue series 2014 bonds as Tobacco Settlement asset-backed bonds, series 2015A and series 2015B.

The case involved is Oppenheimer Rochester High Yield Municipal Fund, et al. v. Tobacco Settlement Financing Corp., et al.

Tobacco Settlement Financing Corp. is a public corporation of the State of Rhode Island and Providence Plantations under Rule 15c2-12 of the Securities and Exchange Commission, as a voluntary filing of the occurrence of the corporation’s Tobacco Settlement asset-backed bonds, series 2002A, Tobacco Settlement asset-backed bonds, series 2007A, Tobacco Settlement asset-backed bonds, series 2007B and Tobacco Settlement asset-backed bonds, series 2007C.

The relevant procedural events in the case leading to the summary judgment were as follows, according to a press release:

• On Aug. 4, Oppenheimer Rochester High Yield Municipal Fund, a series of Oppenheimer Multi-State Municipal Trust, and Oppenheimer Rochester AMT-Free Municipal Fund, holders of some of the series 2007B bonds and all of the series 2007C bonds, filed a complaint against the corporation, seeking a declaratory judgment that the corporation’s plan of finance for the corporation’s proposed Tobacco Settlement asset-backed bonds, series 2014A and Series 2014B, if consummated, would violate State law, including the Tobacco Settlement Financing Corporation Act and terms of the indenture for the series 2007 bonds, dated June 1, 2007, with Wells Fargo Bank, NA as trustee;

• On Oct. 2, Oppenheimer Funds filed a first amended complaint, asserting additional claims against the corporation, as well as claims against the state and the prospective purchasers of the series 2014 bonds;

• On Oct. 21, the corporation moved for summary judgment on all the claims in the amended complaint. The state joined the corporation’s motion for summary judgment; and

• On Jan. 15, the court granted the corporation’s motion.

The court held that the corporation has complied with the provisions of the Act and the consent and approval provisions of the 2007 indenture.

The court also entered summary judgment against Oppenheimer Funds’ as to their claims against the state and the prospective purchasers of the series 2014 bonds.

The summary judgment decision is online at https://www.courts.ri.gov/Courts/SuperiorCourt/SuperiorDecisions/14-3857.pdf.

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