Case Studies
Case Study #1:
Existing Charter Expansion and Financing
Long Term Single Investor Bond Financing due diligence report for PNC Bank
AES was engaged to complete a thorough pre-financing due diligence visit of an existing charter school interested in bond financing for a permanent facility that allows for expansion and longevity.
AES submitted a final report of findings and recommendations to support the financing and included risk assessment of potential challenges as well as potential solutions or proposals for those challenges. Report included a disclosure of a perceived/potential conflict of interest and identification of a major revenue/budgeting item that actually improved the School’s potential revenue stream for the future.
The final report was a comprehensive narrative that covered each priority for the investment group and included evidential items, photos, multiple forecasts, updated bios of the board members and leadership and conclusion based on evidence.
This financing was ultimately approved, and the project has been successful.
Case Study #2:
New Charter Development and Operations
AES was secured by the Governing Board to develop, open and operate a new K8 charter school in Charlotte. AES worked directly with the Board to write and submit the charter application, coach the Board for the in-person interviews with the authorizer and secure the approval. During the course of the application cycle, AES was able to secure letters of interest for financing the project and identified an appropriate parcel of land which was put under contract with a due diligence clause. The inclusion of site with financing greatly improved the value of the application and this application was approved in its first submission.
Immediately upon approval, AES worked directly with the investor groups to secure long term bond financing to build the permanent facility for this school. AES served as the credit enhancement for this project and has long term oversight responsibilities of this school. AES has subordinated its fees under the primary investor debt service which provided the school a very favorable rate and the ability to effectuate the school mission on day 1 of year 1. This was the first standalone charter school to open in NC with bond financing and was one of the most successful openings in a saturated and competitive market. This school has continued to be successful in its second year of operations and increased its initial enrollment by 48%
during COVID when most schools have seen rapid declining enrollment.
Case Study #3:
Distressed Charter Renewal prior to Facility Acquisition
AES was engaged by a school to assist with an upcoming charter renewal. This school had been an underperforming and under enrolled school during its first charter term. AES conducted an onsite visit to assess program and its stakeholders, conducted comparative studies against local district and charter schools and felt a case for renewal could be made if it included its own corrective action plan and a strategic plan for long term improvement.
Over the course of two months, AES wrote the charter renewal and continued to work with the leadership team, Board treasurer and community to clarify the mission of the school and
implement an academic improvement plan. Most importantly, AES revised the current budget and made recommendations to improve the fiscal stability of the school and created
a debt service schedule that improved the School’s net position. AES also created a comprehensive marketing campaign to increase community engagement and applications.
This school demonstrated academic improvement and increased enrollment during the course of its renewal year and with coaching the School successfully received a charter term renewal and is now a candidate to transition to a permanent facility.
Case Study #4: Voyager Academy
New Series 2020 Taxable Bond Financing
Transaction Overview
On March 2nd, 2020, Voyager Academy closed on the first ever public offering of a 30-year taxable charter school bond in the municipal market at a true interest cost of 4.37%. This investment grade issuance allowed the school to refund the outstanding 2012 and 2014 bonds, and payoff an existing bank note, saving the school approximately $235,000 a year!
D.A. Davidson & Co., as bond underwriter has priced bonds for Voyager Academy three times since 2012, including this past January 2020. Voyager Academy is a true success story when it comes to a charter school planning their long term financing strategy alongside their school’s growth.
Voyager Academy can claim their spot among only four other investment grade charter schools in the state of North Carolina, and as the only one in Durham.
Overview of Voyager’s facility financing history:
- 2007 New Market Tax Credit: initial financing for the
middle school facility - Developer Lease Financing: finance the construction
of the high school and elementary school facilities - 2012 Non-Rated Bond Financing: acquisition of the
elementary and high school facilities - 2014 “BB+” Rated Bond Financing:
refinance/unwind middle school facility loan - 2019 Bank Note Financing: finance the athletic
complex after receiving investment grade credit rating - 2020 Investment Grade Taxable Bond Financing:
refinance all outstanding debt for annual cash flow
savings of $235,000
“Voyager Academy took on our first bond financing nearly eight years ago. As the first
investment grade rated charter school in Raleigh/Durham, North Carolina, Voyager has
met the challenge with unprecedented success. This financing will save Voyager
Academy more than $6MM over the next 23 years, ensuring our ability to continue
achieving great things by putting our students first.”
– Jennifer Lucas, Managing Director