Indiana City’s $200 Million Sale Finances Mill: Muni DealPriya Anand
Valparaiso plans to sell $200 million in tax-free revenue bonds this week on behalf of box-maker Pratt Industries to finance a paper-recycling plant that will add more than 100 jobs in the northwest Indiana city.
The mill is expected to produce almost 380,000 tons of containerboard annually once at full capacity in 2018 and employ as many as 137 people, according to Valparaiso officials. It is slated to open in 2015, according to bond-offering documents.
“We, as the city, obviously are pleased as punch to have Pratt expand in our community,” said Stu Summers, executive director of the Valparaiso Redevelopment Commission. “They are a good employer. They are a good taxpayer.”
The city has agreed to repay the company for as much as $13.5 million in costs tied to the project, according to sale documents. The state’s Northwest Indiana Regional Development Authority has offered about $15 million in incentives, and the Indiana Economic Development Corp. plans to provide as much as $1.2 million in tax credits and $200,000 in training grants as Pratt adds jobs at the new plant, according to the city.
Pratt, which describes itself as the largest producer of 100 percent recycled paper and packaging products, already employs more than 300 people in Valparaiso. The city is about an hour’s drive southeast of Chicago.
Parent company Pratt Holdings Inc., a closely held paper and packaging manufacturer based near Atlanta in Conyers, Georgia, operates 71 plants in the U.S. and Mexico through subsidiaries, including facilities in New York’s Staten Island and Oakland, California. Their products are used in packaging for such items as food and beverages, electronics and medicines.
Pratt Industries had net income of about $9.6 million on sales of about $1 billion in the 12 months through June 2010, according to bond documents. It listed long-term debt of about $411 million.
The bonds, guaranteed by Pratt, mature over 30 years through January 2044. Bank of America Corp.’s Merrill Lynch unit is leading the sale.
Michael O’Regan, a Pratt spokesman, declined to comment on the bond issue.
Valparaiso joins issuers from California to Massachusetts offering about $5.3 billion in long-term debt this week, down from last week’s $5.8 billion. Investors pulled $738.5 million from municipal-bond focused mutual funds in the week through Nov. 6, according to Lipper US Fund Flows data.
An index of top-rated 30-year munis had a yield of almost 4.2 percent on Nov. 8, down from about 4.8 percent on Sept. 4, the highest level since April 2011, according to data compiled by Bloomberg.