Friday, November 2, 2018

The Little Blue Agency That Could

A itsy-bitsy state agency wants to issue $895 million in bonds.  Wyatt Emmerich, Publisher of the Northside Sun tried to dissect the deal but ended up banging his head against the proverbial wall:

When a Tiny backwater state agency published a public notice in the newspaper that it planned on issuing up to $895 million in state debt, it raised some eyebrows.

The Municipal Gas Authority of Mississippi (MGAM) only has a half-dozen or so employees, but that isn’t stopping the 30-year-old agency from some whopping plans.

MGAM plans on issuing bonds to buy a 31-year supply of gas for 25 small municipal natural gas operations located throughout the state.....

Here’s the thing I can’t get over. The 25 Mississippi municipal gas companies represented by MGAM purchased a total of $18.7 million in natural gas in 2017. If MGAM issues $895 million in bonds, the interest on the bonds alone will cost about $35 million in the first year. How does that make sense? Just the interest on the bonds alone is twice the total amount spent on gas for the whole year.

I emailed that question to Wilson, but I never could figure out his answer. To his credit, he has been responsive, it’s just loaded with technical jargon. ... Rest of column.
Sure would love to get the "financial advisor" fees on this deal. 


Anonymous said...

That's a lot of villas in Switzerland.

Anonymous said...

Laughing My Ass Off! On the very heels of the Timber Debacle and while recalling the Ebers scandal and all the Obama green projects that went belly up and Haley's car that was to be built in Tunica County and Beef and Electric and, now.....GAS.

This whole thing smells of shit and gives me gas.

Anonymous said...

I doubt the people at MGAM have the slightest understanding of this proposal. They are only listening to the pitch from the people proposing it. Those people will make money regardless of future gas prices and could not care less of what happens to the municipalities down here. If you get natural gas from a municipality, you should be terrified.

Oh, and Butler Snow is also salivating over the fees it will make from this deal.

How can a little pissant agency like this issue almost a billion dollars worth of debt without approval or at least a review of some sort from a knowledgeable, qualified and neutral entity?

Anonymous said...

Bonds issued.
Bond counsel, underwriting, financial adviser, etc., all get their cut.
Proceeds from sale go to running the organization, paying expenses, etc.
New office space secured.
New furniture purchased.
All current employees receive raises, especially head of agency.
Additional "friends" hired.
Lobbyist "friends" paid.
Several conferences are attended.
New vehicles leased.

This continues for several years.

Bonds default due to late, then non-existent interest payments.

If there is a "put" feature, this will happen sooner.

Anonymous said...

Absolutely preposterous.

Anonymous said...

Wonder where Tater Tot and Gunn stand on this. They're big on cutting "fluff." But, but, but....

Anonymous said...

Hat tip to Wyatt for calling this foolishness out.

I swear, watching all this Mississippi cronyism is enough to turn me liberal.

Lord Commander of the Night's Watch said...

Who is the counsel on this? I bet we could all guess. Winter is coming!

Anonymous said...

Who is Wyatt Emmerich?

Macy Hanson said...

"As I see it, the biggest beneficiaries of this deal are lawyers, bankers and middle men. Certainly the staff of MGAM will have 31 years to administer the program."

Very correct statement. Probably an understatement. I hope coverage on this story continues. Perhaps I missed these details in the piece, but does the notice, or any of the documents available, state who the bond counsel, borrower's cousel, issuer's counsel, etc., and advisors will be?

Mark Twain said...

12:05.... PRICELESS

Anonymous said...

Amazing to contrast the investigative reporting abilities of The Northside Sun/W. Emmerich with those of the state's paper of record, the Clarion Ledger. This is an important story and I doubt seriously the CL will ever get interested enough to investigate.

Good job, NS.

Anonymous said...

There is no reason they would ever need to buy a 31 year supply of natural gas. Who is selling them the supply? Who are the big names promoting this "deal" behind the scenes?

Anonymous said...

Will we still be using natural gas in 31 years?

Anonymous said...

If they can figure a way to connect the proceeds to Susan G. Komen, the Jackson Gentried will foam at the mouth to get signed up for affiliated sponsorships.

Anonymous said...

Anonymous said...

Wyatt ended up banging his head against the wall because he doesn't understand the desl. And probably doesn't want to understand it. He thinks it's bad because he has no concept what the little agency does or why it exists. But, he doesn't take the time to understand a complicated, but not unusual transaction.

Anonymous said...

Where's our boy Delbert "Where are the Cameras" Hosemann on this?

Anonymous said...

HINT....not only is the Governor leaving office next year but so are those around him with the power. There will be a connection from one of these opportunists in this deal and others as they fade into their self inriched futures. Also watch for fingerprints of those that will be steering contracts such as the lottery. It’s nothing new but don’t be shocked when you see the smiling faces of these rats in lucrative contracts in the next couple of years. Good job Wyatt!

Anonymous said...

9:22. Please splain it to us po folk.

Anonymous said...

"Where's our boy Delbert "Where are the Cameras" Hosemann on this?"

Oh, he'll be soliciting them asking, "Is there anything I can do to help? I'll be glad to look the other way, as long as you vote for me."

Delbert Whoreman is worthless.

Anonymous said...

Not so fast folks. I’ve worked with MGAM’s executive director Jeff Wilson in my former capacity as a municipal utility board member. Jeff is a highly intelligent Wharton business school graduate who was hired by MGAM for his extensive background in energy trading at Shell Oil. He has saved MGAM customers millions of dollars over the years with his knowledge of the energy markets. I would be surprised if Jeff was not trying to lock up a long term supply of natural gas for his member cities. NG is $3.25 today which is historically very cheap. Ten years ago it was $11. Twenty years ago it was $18. Personally, I can live with $3.25 for a long time.

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