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ptember 3, 2014 <br />Aaron M. De,bng <br />Economic Development Director <br />Qty of Louisville, OD <br />749 Main S reet <br />Louisville, OD80027 <br />Dear Mr. De.bng: <br />George K. Baum & Company <br />I N V E S T M E N T B A N K E R S S I N C E 1 9 2 8 <br />George K Baum & Company has been working with Takoda Properties Inc. on the DeLo project for the <br />past three years and has provided numerous sets of financing numbers. Each of these scenarios included <br />interest earning interest until paid. That includesfinancing scenarios provided before and after approval <br />of the Term Sleet. <br />Bond issues sold in the public market or through a direct placement regularly have language that states <br />that any unpaid interest will continue to accrue interest and compound until paid. It would be highly <br />unusually to have a bond issue where unpaid interest does not accrue interest. For example, here is <br />typical language: <br />"To the extent that interest on the bond is not paid when due, such interest shall compound on each <br />interest payment date, at the rate then borne by such bond." <br />Capital appreciation bonds like tho used for the Takoda Metropolitan District are another common form <br />of bond. By definition, capital appreciation bonds are bonds with compounding interest. <br />Occasionally interest does not compound on developer reimbursement agreements or subordinate notes <br />where interest is not expected to be paid for a long period of time. <br />If George K Baum & Company can be of any additional assistance, please do not hesitate to contact me at <br />303.391.5503. <br />Sncerely, <br />CORCGE K BAUM & ODM PANY <br />jOn,•i 1 1 eig61) <br />Alan T. Matlos <br />Senior Vice Resident <br />Colorado Riblic Finance <br />1400 Wewatta Street, Suite 800, Denver, Colorado 30202 <br />(303) 292-1600 <br />