The Asian still needs it's own Hideyoshi, although one hopes that if it does obtain such a patron, it would work out better than Hideyoshi's patronage of the tea master, Sen no Rikyu. (Rikyu died after committing ritual suicide for reasons that are still mysterious.) Maybe the upcoming Year of the Rabbit will be more financially beneficial than the outgoing Year of the Tiger.
From the Asian's Pres release:
Mayor Newsom, City Attorney Herrerra, City Controller Ben Rosenfield, President Chiu and Asian Art Museum Foundation Announce Proposal to Restructure Foundation's Debt
Proposed Financial Agreement Provides Long Term Stable Financing for Asian Art Museum
Mayor Gavin Newsom, City Attorney Dennis Herrera, City Controller Ben Rosenfield, Board of Supervisors President David Chiu and the Asian Art Museum Foundation, the private fundraising arm of the Asian Art Museum, today announced a proposal to restructure the Foundation’s $120 million bond debt. The five-party proposed agreement, coordinated by City Attorney Herrera, City Controller Ben Rosenfield, and City Public Finance Director Nadia Sesay with participation from the Foundation and its creditors, JP Morgan Chase and MBIA, Inc., provides long term stable financing to the Foundation, allowing the organization to continue to raise the funds necessary to support the Museum’s dynamic range of exhibitions and programs. The proposal will now be submitted to the Board of Supervisors, Asian Art Commission and Asian Art Museum Foundation for their consideration.
“This is a smart, carefully crafted agreement that both solves the immediate financial crisis facing the Asian Art Museum and helps guard against similar difficulties in the future,” said City Attorney Herrera. “This problem-solving effort took a great deal of creativity and hard work, and I’m especially grateful to Mayor Newsom, City Controller Rosenfield, and the museum’s management. Work outs are not easy or pleasant. I ’m also appreciative to JPMorgan Chase and MBIA for their cooperative approach here in recognizing the need to make concessions and hammering out an appropriately balanced deal. The Asian Art Museum is a world-class cultural treasure, and it deserves the enthusiastic support from City leaders and art lovers throughout the region.”
“The history and legacy that the Asian Art Museum represents will continue to be a cultural icon for many visitors around the world for many years to come because of the steps that we are taking today,” said Board of Supervisors President David Chiu, who will sponsor the legislation and shepherd it through the Board of Supervisors.
“The Asian Art Museum Foundation’s investments and debts—like many nonprofits—have been rocked in recent years by the effects of the global financial crisis,” said City Controller Ben Rosenfield. “The proposal we’ve collaboratively crafted allows the Foundation to regain its financial stability so that it can continue to generate much-needed financial support to the Museum.”
First, there is a restructuring of the rate and term of the Foundation’s bonds. JPMorgan Chase will extend a loan at a low fixed-rate of 4.60% to replace the existing variable rate bonds. Also, the term of the bonds is extended to 30 years (versus current 23 years), and a portion of the principal on the new bonds is deferred in the first two years to allow “breathing room” while the Foundation is restored to full financial health.
A second component of the proposal includes a reduction in the total loan principal and a return of funds to the Foundation. In addition to the benefits from the restructured bond’s rate and term, the Foundation receives upfront cash concessions of $21 million, thereby reducing the outstanding principal amount to $99 million from approximately $120 million, or a reduction of 17%. Also, the current Swap agreement created in 2005 is canceled and the collateral (with a current balance of $13 million) will be returned to Foundation.
The third element requires the Foundation to launch a three-year capital campaign. The first $20 million raised in new unrestricted philanthropic commitments will be required to close the gap (assuming 6.0% return). Funds raised above and beyond this amount could be used to build the museum’s endowment or fund strategic initiatives. Through the leadership of former Mayor Willie Brown, City Attorney Dennis Herrera, Mayor Gavin Newsom and Supervisor Carmen Chu, a committee of civic leaders will be recruited for a capital campaign that will bolster and broaden the Foundation’s fundraising capacity.
“On behalf of the Asian Art Museum Foundation, I express our deep gratitude to Mayor Newsom, City Attorney Dennis Herrera, Controller Ben Rosenfield, and other City officials for their leadership in facilitating a solution toward servicing the Foundation’s debt,” stated Akiko Yamazaki, President of the Asian Art Museum Foundation. “We are now well-positioned to fulfill our role in supporting the Museum’s future endeavors. The Foundation welcomes the leadership of the City in helping us achieve our goals, and we urge the Board of Supervisors to support this proposal.”
Finally, while the Foundation remains primarily responsible for debt and pledges its assets, the City would provide an assurance agreement to replace the current MBIA insurance policy for the debt. Under this proposed agreement, the City will agree to seek funding for the Foundation’s bonds under certain conditions if the Foundation does not have sufficient funds. The proposal also strengthens the working relationship between the City and Foundation to ensure the Foundation’s debt is effectively serviced. For example, the City Controller’s Office will review and offer recommendations to the Foundation’s annual budget.
Comments
There are more stories at today's SF Gate with the usual comments but some of them are astute. Today's Bond Buyer also has more information:
http://www.bondbuyer.com/news/-1021863-1.html?CMP=OTC-RSS
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