UF00083631_00116.pdf

UF00083631_00116.txt

UF00083631_00116_pdf.txt

SUPPLEMENT To 0 a A (To be incorporated at proper place.)

0. There is been some criticism of the fact that priOr to the

refunding, the bonds were selling at a discount, and that a

premium had to be paid to recall the original issue: is this

true?

YQB. 1t is true.

The bonds had dropped well below par in the

open market. That is why the Turnpike Authority, in using its

surplus to retire some $l0 million of the bonds before maturity.

bought the bonds in the open market. The authority thus made

a saving of the difference between the market price and the

recall price had it been necessary formally to recall some of

the bonds. However. in refinancing the entire issue, it was

necessary to follow the contractual procedures of the original

issue. These were spelled out in the trust indenture. As

is customary with practically all bond or debenture issues. both

by public agencies and private corporates, a schedule of the

recall premium is included in the agreement.

By custom. the

premium diminishes periodically over the life of the bond.
When the remaining portion of the original issue was recalled,

the premium was sale per $100. In the prospectus. the

premium was calculated at $2,233,595. Interest accrued to the

time of the recall naturally had to be paid. and this was

calculated at $1,037,026.

(Supplenent)

Would it not have been possible for a person with advance
knowledge of the refunding to have bought bonds below par
and realize a nice profit upOn recall?

This is certainly possible. Likewise. it is a possibility

cannon to any bond or debenture issue, public or private. which

happens to be quoted in the sarhet below par. It is a col-on

field of speculation by professionals in the bond market.
Would yOu consider it ethical for any 'insider, that is. any
one associated with the Turnpike Authority or the related
State agencies. to have engaged in this practice?
By no means would I consider this to be ethical. In private
corporations, insiders deliberately realising such a profit

can be sued by any stockholder and forced to return the profit

to the corporation. In public issues. there is no such direct

route to recovery of profits so realized. There is public

resentment and condemnation of any public official who does

take advantage of such a situation. I would enphatically join

in this rebuke and condemnation. I have no knowledge of any
official who did take advantage of this situation, ided

noe-seggeee-ehe-puIatbttttteeeeanyaseooiatea_oc£rienda.
Anyuineineeeien~or*innuendo that the purpose of the refinancing
was to create this possibtiity is untrue. unfair~end unjust.

The need for refinancing. forthe reasons explained. waa.the con-

trolling_and deterutht§fifat.

3.

(Supplement)

Have you made a detailed reveiw of the transactions in the
bonds after negotiations were started for refinancing?

No, I have not made such a review. and I do not intend to make
such a review. Ihis_is_uithintheprovtnceotrthertegiststure
- Mb -g )N A A Pa. 0,.zt-Q .4 .\.'4

. Records o£~erens£erev





Qt the.hcnde eremetntatnedyfthe trustee designs

the-trans£er_agent.

I have had one request tron a press

representative for the record of these transfers. These not

being available here or in the offices of the Turnpike Authority,

'1; u- 2 )bm"
I have requested thetrustee to cooperate fully with the press
;-.q-'Egi'ai;3"pa

representative.because he is performing a recognized duty of

the press.

It were£284n06~£renwtaktngranyractton-heeeuse-Of
0ux.iear_that_unethioaloeignore}-ekementseofthepopeisce

wonld._thxou9heheir-undestred~cUuuctTderive~eone_hene£it.
thsa_!_!guld.298tn9needelay-ere~en~ebendon~sanxuactigns.

In_ne._the.noet-deplorable snd'delpIiEIEUlnhetng~ie7the
public officer whois_unloyal touthe true: pieced 1nh1Mhy

the people.




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