CLARKSVILLE, Tenn. – CDE Lightband officials and Mayor Kim McMillan celebrated a money-saving afternoon Thursday as they gathered to finalize the refinancing of a large bond issue.
As a result of three such actions since 2014, CDE Lightband has reduced its debt payments by $15.1 million on three outstanding bond issues over the next 20 years. This is good news for CDE Lightband’s electric ratepayers, because the savings will be used to fund construction of substations and other capital assets, without the need to raise rates or borrow money for those purposes.
“This shows precise, sound financial management by the City of Clarksville,” Mayor Kim McMillan said.
David Johns, CDE Lightband’s chief financial officer, said the utility as of June 30, 2017, owed $69 million in principal payments and $34 million in interest payments on three major bond issues. Thanks to good timing and favorable conditions in the municipal bond markets, Johns said, CDE, the City’s finance department and its bond advisers, attorneys, and underwriters were able to refinance bonds issued in 2010 -- a process known as bond refunding -- at more favorable terms.
This recent refunding allowed CDE to save $6.79 million in principal and interest payments. A similar action in 2014 reduced debt payments by $550,997, and a bond refunding in 2015 saved $7.76 million. The three refundings bring the total savings to $15.1 million.
“We were able to shorten the term of the bonds by 2.5 years, and reduce our total payments by $15.1 million,” CDE Lightband General Manager Brian Taylor said. “This is good for our ratepayers, and good for the overall financial position of our operation.”
Mayor Kim McMillan signs final documents to refund the last of three CDE Lightband bond issues. The refinancing of the bonds will save the utility more than $15 million in bond payments over the next 20 years.