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National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1509-1694994 28
6. Mortgages and Debt (continued)
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 0.55% and 0.56% at September 30, 2014
and 2013, 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,