Flore Roger Guillot
December 2, 2008Dec. 4
December 4, 2008The Terrebonne Parish Economic Development Authority passed its first bond issue resolution in the organization’s three-year existence.
TEDA will be the issuer of a $5 million Gulf Opportunity Zone bond for Houma-based Anheuser-Busch distributor Buquet Distributing Company.
Capital One Bank is the purchaser of the bond.
“(Buquet is) expanding, and this will help them finance their expansion at a lower rate,” said Mike Ferdinand, TEDA chief executive officer.
GO Zone bonds are tax-exempt, which can reduce the overall interest rate for the borrower by 1.5 to 2 percent below conventional financing. The higher cost of issuing the bonds will offset some of the reduced rate in the first year of borrowing.
Although expansion plans are still in the development stage, J.J. Buquet III, president and chief executive officer of Buquet Distributing, said market growth has dictated the need for starting the financing process now.
“We’re looking to add on to our warehouse facility as well as some remodeling to our offices,” he said. “Anheuser-Busch has been slowly getting into more non-alcohol-related products. There is some expectation that trend will continue. Between the non-alcohol products and the new beer brands that are coming online, we found ourselves increasingly constrained for warehouse space.”
Buquet Distributing covers all of Terrebonne, Lafourche and St. Mary parishes, and reaches north to Labadieville in Assumption Parish and south to Grand Isle in Jefferson Parish.
GO Zone bonds are part of the GO Zone Act passed by Congress in December 2005 to help Louisiana, Mississippi and Alabama recover from hurricanes Katrina and Rita.
Louisiana received $7.9 billion in GO Zone bonds to be allocated through the State Bond Commission.
The state has until 2011 – or when all funds are exhausted – to issue the bonds.
The Louisiana Community Development Authority and the state Public Facilities Authority issue most state bonds, but TEDA is authorized under its 2005 founding legislation to be a bond issuer.
“This is one of the roles we can provide to the Terrebonne business community,” said Katherine Gilbert, TEDA business retention and expansion director.
“We can offer this to businesses that need to make investments and are looking for a cost-effective way to do that. They don’t have to go through one of those state organizations. They can work with someone locally, who’s on the ground and whom they probably already know,” she added.
Gilbert said it took several months to complete the bond issuance because the State Bond Commission went through a stagnant period of reorganization.
At the Nov. 26 TEDA meeting, Ray Cornelius, bond attorney for the New Orleans law firm Adams and Reese LLP, representing Buquet Distributing, assured the TEDA board that the bond agreement was a safe investment.
“If there is a default, there will be no liability on the part of this board,” he said. “I’ve been doing this since 1979, and I’ve never had a single issue with paying off a bond.”
