Nueva Esperanza, Inc.
On December 20, 2013, BB&T Capital Markets closed a $32 million tax-exempt fixed rate bond transaction for Nueva Esperanza, Inc. (Esperanza). Esperanza provides support to the Hispanic community nationally through three primary areas of charitable activities; education and employment services, community economic development, and national nonprofit capacity-building. Local education initiatives include Esperanza Academy Charter School (Esperanza Academy), a charter school located in Philadelphia, Pa., as well as other educational institutions. The primary purpose of the Series 2013 Bonds is to 1) fund renovations and improvements, including the expansion and interior build-out of a middle school, construction of a shared community space, a gymnasium, an auditorium for performing arts and parking facilities; and 2) refinance existing loans, including a New Market Tax Credit (NMTC) Loan. In addition, bond proceeds provide funds for a debt service reserve fund and approximately 23 months of capitalized interest. Esperanza was also awarded a Redevelopment Assistance Capital Program Grant and a grant from the city of Philadelphia.
The financing presented several challenges which BB&T Capital Markets addressed. First, the existing financing structure included a NMTC Loan component resulting in complex legal issues regarding the defeasance that ultimately needed to be resolved before the expansion financing could occur. Second, the financing needed to be completed in time to allow Esperanza Academy to continue its growth and open in fall 2014. Third, Esperanza and BB&T Capital Markets needed to navigate a challenging credit environment and rising interest rate market while articulating the complex security package of the proposed credit. BB&T Capital Markets defined a flexible financing structure and process in addition to an intricate security structure that enabled strong collateral and cash flow coverage. Market acceptance was primarily due to Nueva Esperanza’s well-qualified management team, its diverse revenue sources within the security package, and Esperanza Academy's nationally recognized academic performance.
Ultimately, BB&T Capital Markets was successful in leveraging its developed sales and trading platform as well as its established relationships with charter school specific investors. These focused efforts, as well as BB&T Capital Markets’ industry leading distribution capabilities and Nueva Esperanza, Inc.’s, unique credit profile resulted in a simplified financing structure that included $32 million in tax-exempt fixed rate bonds with a final maturity of 2043. Additionally, BB&T Capital Markets closed the financing within the school’s desired timeframe, allowing the new facility to open as scheduled.