Amtrak 2015 Annual Report Download - page 25

National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
6. Mortgages and Debt (continued)
23
High Speed Maintenance Facilities
On October 30, 2012, Amtrak purchased the equity ownership interests related to leveraged lease agreements
under which Amtrak leases three Acela maintenance facilities. As a result of the buyout, Amtrak no longer
makes lease payments relating to the equity interest, but continues to make payments servicing the leveraged
lease debt. As of September 30, 2015 and 2014, the balance of such debt was $62.2 million and $69.1 million,
respectively. Amtrak’s obligations are collateralized by a pledge of Amtrak’s interests in the maintenance
facilities.
Frequency Converter Facility
During FY2001, PEDFA completed two issues of exempt facilities revenue bonds, the net proceeds of which
were used to finance part of the costs associated with Amtrak’s construction of a frequency converter facility
(the Facility). The first series (Series A) for $110.8 million was issued in February 2001, at a $0.8 million
discount, netting $110.0 million. The second series (Series B) for $45.0 million was issued in April 2001, at
par. Amtrak procured the bond proceeds of each issue through a structured financing arrangement with
PEDFA. Under this arrangement, Amtrak leased the Facility to PEDFA until November 2041, under a long-
term ground lease, in exchange for the total net proceeds. Simultaneously, Amtrak leased the Facility back
from PEDFA through June 2033, with an option to extend this term through November 2041. PEDFA also
has the right to extend Amtrak’s leaseback term through November 2041. Amtrak’s obligations in connection
with the Series A Bonds and the Series B Bonds (and any reissuances thereof) are collateralized by a pledge
of Amtrak’s interest in the Facility.
On February 15, 2012, Amtrak initiated a mandatory tender for purchase of the $45.0 million Series B bonds.
The Series B bonds were remarketed to a commercial bank that agreed to hold the reissued Series B bonds
(Series B 2012) for a period of five years. In connection with the mandatory tender for purchase and the
issuance of the Series B 2012 bonds, the interest rate was converted to a tax-effected fraction of the one-
month London Interbank Offered Rate (LIBOR) plus 0.65% per annum, which was an effective rate of 0.58%
and 0.55% as of September 30, 2015 and 2014, respectively. The LIBOR-based interest rate will continue
unless or until converted to another interest rate mode by Amtrak. In connection with this transaction, the
Company and PEDFA executed and amended certain provisions included in the existing bond documents
and lease arrangements with PEDFA.
On March 31, 2012, PEDFA issued $95.1 million of PEDFA exempt facilities revenue refunding bonds (Series
A 2012) to refund Series A of 2001 with varying maturities between November 1, 2013 and 2041. The interest
rates on the Series A 2012 bonds range from 3.0% to 5.0% (yields ranging from 1.1% to 4.7%), payable
semiannually. The Series A 2012 Bonds were issued at a $4.6 million premium, which is being amortized on
a straight-line basis (which approximates the effective interest method) over the term of the Series A 2012
bonds. The proceeds from the issuance and funds from the existing debt service reserve fund were used to
(i) refund the 2001 Series A bonds outstanding in the amount of $102.4 million; (ii) pay accrued and unpaid
interest on Series A bonds of $2.7 million; and (iii) pay the redemption premium of $1.0 million and the
issuance costs of $1.3 million. The issuance costs were classified within “Deferred charges, deposits, and
other” in the Consolidated Balance Sheets and are being amortized to interest expense over the term of each
bond issuance. As of September 30, 2015 and 2014, $136.9 million and $138.5 million, respectively, of the