Professional Documents
Culture Documents
TO
PRELIMINARY OFFERING CIRCULAR DATED JANUARY 10, 2013
PERTAINING TO
$423,055,000
*
JobsOhio Beverage System
Statewide Senior Lien Liquor Profits
Tax-Exempt Revenue Bonds, Series 2013A
$1,103,685,000
*
JobsOhio Beverage System
Statewide Senior Lien Liquor Profits
Taxable Revenue Bonds, Series 2013B
This is to advise that the LITIGATION section in the Preliminary Offering Circular for the captioned
bonds is supplemented and revised by adding the underlined language shown below and deleting the stricken
through language.
LITIGATION
The laws enacted by the Ohio General Assembly providing for the creation of JobsOhio (collectively, the
JobsOhio Act), and JobsOhio itself, have been the subject of litigation filed in Ohio courts concerning, among
other matters, the constitutionality of the JobsOhio Act and the legal existence and capacity of JobsOhio
(collectively, the Substantive Claims), and requesting the JobsOhio Act be declared unconstitutional and an
injunction prohibiting the formation and continued operation of JobsOhio, the Department of Development from
contracting with JobsOhio and the making of any appropriation to JobsOhio. Those Substantive Claims include
allegations that under the Ohio Constitution the JobsOhio Act is a special act conferring corporate powers, that the
State may not lend its aid and credit to JobsOhio, that the provisions for State financial support of JobsOhio is an
appropriation beyond the current State fiscal biennium, that transfer will cause the State to exceed its debt limits,
that the JobsOhio Act violates the one subject rule for legislation, and that the 60 day statute of limitations for
challenging JobsOhios actions is too short. None of these Substantive Claims has been addressed by the courts; and
the only pending litigation (the Pending Litigation) is an appeal to the Ohio Supreme Court of the unanimous
decision of the Ohio Tenth District Court of Appeals affirming the decision of the Franklin County Common Pleas
Court that the plaintiffs lack standing to litigate the Substantive Claims. The Ohio Supreme Court has not yet
announced whether it will accept plaintiffs appeal to consider the issue of their standing. JobsOhios management
has reviewed the Substantive Claims and believes they are without merit.
In light of the Pending Litigation, the Commerce Director expressed his desire that the Ohio Supreme Court
be given the opportunity to address the Substantive Claims involving Ohio constitutional issues. JobsOhio
subsequently filed an original action in the Ohio Supreme Court on August 10, 2012, requesting that it issue a writ
of mandamus ordering the Commerce Director to sign the Transfer Agreement, which placed the Substantive Claims
and JobsOhios responses to those Substantive Claims before that Court. The mandamus action was dismissed by
the Ohio Supreme Court on September 28, 2012 for lack of proper jurisdiction, without determining any of the
Substantive Claims.
As noted above, the Ohio Supreme Court has not yet announced whether it will accept plaintiffs appeal of
the dismissal, for lack of standing, of the Pending Litigation. On January 23, 2013, the Ohio Supreme Court
exercised its discretion to hear the plaintiffs appeal solely on the question of standing. The Ohio Attorney General
and Squire Sanders (US) LLP both are of the opinion that the Ohio Tenth District Court of Appeals correctly upheld
the dismissal by the Franklin County Common Pleas Court of plaintiffs claims on the ground that plaintiffs lacked
standing to bring those claims under the current applicable law and will render their respective opinion letters to that
effect in connection with the issuance of the Bonds.
The final Offering Circular will reflect these revisions.
*
Preliminary, subject to change.
T
H
I
S
P
R
E
L
I
M
I
N
A
R
Y
O
F
F
E
R
I
N
G
C
I
R
C
U
L
A
R
A
N
D
T
H
E
I
N
F
O
R
M
A
T
I
O
N
C
O
N
T
A
I
N
E
D
I
N
I
T
A
R
E
S
U
B
J
E
C
T
T
O
C
O
M
P
L
E
T
I
O
N
A
N
D
A
M
E
N
D
M
E
N
T
I
N
A
F
I
N
A
L
O
F
F
E
R
I
N
G
C
I
R
C
U
L
A
R
.
U
n
d
e
r
n
o
c
i
r
c
u
m
s
t
a
n
c
e
s
s
h
a
l
l
t
h
i
s
P
r
e
l
i
m
i
n
a
r
y
O
f
f
e
r
i
n
g
C
i
r
c
u
l
a
r
c
o
n
s
t
i
t
u
t
e
a
n
o
f
f
e
r
t
o
s
e
l
l
o
r
t
h
e
s
o
l
i
c
i
t
a
t
i
o
n
o
f
a
n
o
f
f
e
r
t
o
b
u
y
,
a
n
d
t
h
e
r
e
s
h
a
l
l
n
o
t
b
e
a
n
y
s
a
l
e
o
f
t
h
e
B
o
n
d
s
o
f
f
e
r
e
d
h
e
r
e
b
y
,
i
n
a
n
y
j
u
r
i
s
d
i
c
t
i
o
n
i
n
w
h
i
c
h
s
u
c
h
o
f
f
e
r
,
s
o
l
i
c
i
t
a
t
i
o
n
o
r
s
a
l
e
w
o
u
l
d
b
e
u
n
l
a
w
f
u
l
p
r
i
o
r
t
o
t
h
e
r
e
g
i
s
t
r
a
t
i
o
n
o
r
q
u
a
l
i
f
i
c
a
t
i
o
n
u
n
d
e
r
t
h
e
s
e
c
u
r
i
t
i
e
s
l
a
w
s
o
f
t
h
a
t
j
u
r
i
s
d
i
c
t
i
o
n
.
PRELIMINARY OFFERING CIRCULAR DATED January 10, 2013
OFFERING CIRCULAR
Dated ______________, 2013
NEW ISSUE - Book Entry Only Ratings: S&P: AA
Moodys:A2
See RATINGS herein.
In the opinion of Squire Sanders (US) LLP, Bond Counsel, under existing law assuming continuing compliance with certain covenants and the accuracy of certain
representations, interest on the Series 2013A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the
federal alternative minimum tax imposed on individuals and corporations. Interest on the Series 2013B Bonds is not excluded from gross income for federal income tax
purposes. Interest on, and any profit made on the sale, exchange or other disposition of, the Bonds are exempt from all Ohio state and local taxation, except the estate tax,
the domestic insurance company tax, the dealers in intangibles tax, the tax levied on the basis of the total equity capital of financial institutions, and the net worth base of
the corporate franchise tax. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative
minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see TAX MATTERS herein.
$423,055,000
*
$1,103,685,000
*
JobsOhio Beverage System JobsOhio Beverage System
Statewide Senior Lien Liquor Profits Tax-Exempt
Revenue Bonds, Series 2013A
Statewide Senior Lien Liquor Profits Taxable
Revenue Bonds, Series 2013B
Dated: Date of Issuance Due: January 1
*
, as
shown on the inside cover page
JobsOhio Beverage System (the Issuer, as such term is more fully defined in APPENDIX B attached to this Offering Circular), an Ohio nonprofit corporation whose sole
member is JobsOhio (JobsOhio), is issuing $423,055,000* aggregate principal amount of its Statewide Senior Lien Liquor Profits Tax-Exempt Revenue Bonds, Series 2013A (the
Series 2013A Bonds) and $1,103,685,000 aggregate principal amount of its Statewide Senior Lien Liquor Profits Taxable Revenue Bonds, Series 2013B (the Series 2013B Bonds
and, together with the Series 2013A Bonds, the Bonds), as set forth on the inside cover page hereof. This offering will terminate no later than [*], 2013, unless extended by the
Issuer to a later date.
The Bonds are being issued under a Master Trust Indenture and a First Supplemental Trust Indenture and a Second Supplemental Trust Indenture thereto, each dated as of the
date of issuance of the Bonds (together the Indenture), between the Issuer and The Huntington National Bank, as trustee (the Trustee). The Bonds are being issued to (i) finance
the payment of consideration by the Issuer in connection with the grant by the Division of Liquor Control (the Division) of the State of Ohio (State) of an exclusive franchise to
the Issuer to operate the State liquor enterprise (the Liquor Enterprise) and the transfer of certain assets of the State Liquor Enterprise from the Division to the Issuer, (ii) provide
initial working capital and (iii) finance certain costs of the transactions related to the franchise and the transfer of certain assets. All currently outstanding bonds of the State backed by
the profits of the State Liquor Enterprise will be defeased at the closing of the transactions contemplated by the Transfer Agreement (as defined herein). See PLAN OF FINANCE
Sources and Estimated Uses of Funds. All capitalized terms not otherwise defined herein have the meanings as set forth in APPENDIX B attached to this Offering Circular.
Principal of and interest on the Bonds of each series are payable solely from, and are secured by a parity pledge of the Trust Estate, consisting primarily of the Liquor Enterprise
Profits, as defined herein, all proceeds from the Liquor Enterprise Profits, various funds and accounts maintained by the Trustee, and any and all other property, rights and interests of
every kind or description that from time to time is granted, conveyed, pledged, transferred, assigned or delivered to the Trustee as additional security. The Indenture permits the
issuance of Parity Obligations (as defined herein), but as of the date hereof, there are no obligations in parity with the Bonds. See SECURITY AND SOURCES OF PAYMENT OF
THE BONDS.
The Bonds are subject to mandatory sinking fund and optional redemption provisions as described herein. See THE BONDS Redemption herein.
The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (DTC) which will act as securities depository
for the Bonds. Individual purchases will be made in book-entry-only form. Purchasers will not receive certificates representing their interest in the Bonds purchased. So long as DTC
is the registered owner of the Bonds, payments of the principal of, and interest on the Bonds will be made directly to DTC. Disbursement of such payments to DTC Participants is the
responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants and Indirect Participants. See APPENDIX G attached
hereto. The Bonds shall be issued in denominations of $5,000 and any integral multiple thereof.
Interest on the Bonds is payable on the first Business Day of each January and July as described in this Offering Circular, commencing on July 1, 2013 (each, an Interest
Payment Date). Principal of the Bonds will be paid on the first Business Day of each January, commencing in January, 2015. See THE BONDS General herein.
THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE ASSETS HELD IN THE TRUST ESTATE, EQUALLY AND
RATABLY, AND ARE NOT GENERAL OBLIGATIONS OF THE ISSUER.
THE BONDS WILL NOT CONSTITUTE OBLIGATIONS OF ANY KIND OF THE STATE OR THE STATE PARTIES, AND NEITHER THE FAITH AND CREDIT OF
THE STATE, THE REVENUE OF THE STATE, NOR THE TAXING POWER OR ANY OTHER POWER OF THE STATE, THE STATE PARTIES OR ANY AGENCY OF THE
STATE, ARE PLEDGED AS SECURITY FOR THE PAYMENT OF THE BONDS.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND ARE BEING OFFERED
AND SOLD IN RELIANCE ON ONE OR MORE EXEMPTIONS FROM REGISTRATION PROVIDED BY THE SECURITIES ACT. THE BONDS HAVE BEEN REGISTERED
WITH THE OHIO DIVISION OF SECURITIES PURSUANT TO OHIO LAW. THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE OHIO DIVISION OF SECURITIES OR ANY OTHER FEDERAL, STATE OR GOVERNMENTAL ENTITY OR AGENCY, NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS
OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
MATURITY SCHEDULE See Inside Cover Page
_______________________________________________________________________________________________________________
INVESTORS SHOULD CONSIDER CAREFULLY THE RISK FACTORS AS SET FORTH IN THIS OFFERING CIRCULAR.
This cover page and the inside cover page contain certain information for quick reference only. Investors must read this entire Offering Circular to obtain information
essential to the making of an informed investment decision.
The Bonds are offered when, as and if issued and received by the Underwriters. Certain legal matters will be passed on by Squire Sanders (US) LLP, Bond Counsel and Issuer
Counsel, for the State Parties by McDonald Hopkins LLC, for the Issuer as to certain corporate and tax matters by Jones Day, and for the Underwriters by their counsel, Bricker &
Eckler LLP. The Bonds are expected to be available for delivery through the facilities of The Depository Trust Company on or about [_______], 2013.
*
Preliminary, subject to change.
J.P. Morgan Citigroup
Joint Book Running Senior Manager Joint Book Running Senior Manager
BofA Merill Lynch Morgan Stanley
Fifth Third Securities The Huntington Investment Company KeyBanc Capital Markets Inc. Loop Capital Markets
$423,055,000
Copyright , American Bankers Association. CUSIP data herein are provided by Standard & Poor's CUSIP Service Bureau, a division of the
McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of the holders of the Bonds only at the
time of issuance of the Bonds and the Issuer does not make any representation with respect to such numbers or undertake any responsibility for their
accuracy now or at any time in the future. The CUSIP Number for a specific maturity is subject to being changed after the issuance of the Bonds as a
result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain
maturities of the Bonds.
Serial Bonds
January 1
*
Principal
Amount*
Interest
Rate
Price or
Yield CUSIP
January 1
*
Principal
Amount*
Interest
Rate
Price or
Yield CUSIP
January 1
*
Principal
Amount
*
Interest
Rate Price CUSIP
The Issuer will receive, as of the time of delivery of the Bonds to the Underwriters, [__________] percent
of the aggregate price at which the Bonds are sold by the Underwriters on behalf of the Issuer, without deduction for
any additional commission, directly or indirectly, and without liability to pay additional sums to the Underwriters as
commission. The proceeds of the Bonds and the estimated uses of such funds are shown below:
Sources of Funds
Principal Amount of the Series 2013A Bonds $423,055,000
Principal Amount of the Series 2013B Bonds 1,103,685,000
Net Original Issue Premium 42,513,458
TOTAL SOURCES $1,569,253,458
Uses of Funds
Refunding of Current State Bonds $829,946,711
Remainder of Consideration to State 600,000,000
Total Consideration to State 1,429,946,711
Working Capital 125,000,000
Capitalized Interest 5,126,439
Costs of Transfer Transaction and Issuance of Bonds 9,180,308
TOTAL USES $1,569,253,458
times of Maximum Annual Debt Service on the Bonds ($107.1* million). See Debt Service Table
herein and THE LIQUOR ENTERPRISE Adjusted Revenues Chart herein.
Other requirements for the issuance of Additional Obligations include (i) certain opinions of counsel and
(ii) that Issuer is not in default of any of their covenants or obligations contained in the Indenture or in the
Obligations, and the authentication and delivery of those Obligations will not result in any such default.
Additional Obligations means any indebtedness of the Issuer (including any bonds, loan agreements,
notes, contracts, installment sale, reimbursement, revolving credit and standby bond purchase agreements) other
than the Bonds, any Ancillary Obligations, Debt Obligations, or Hedging Obligations, or any combination thereof,
that are secured by Liquor Enterprise Profits.
Covenant to Enforce the Agreements
The Issuer has covenanted to ask, demand, sue for, levy and use its best efforts to recover and receive such
sums of money, debts, dues or other demands whatsoever owed to the Issuer to which it may be entitled under any
contract, order, receipt, guaranty, warranty, writing or instruction in connection with any of the foregoing, and to enforce
the provisions of any contract, agreement, obligation, bond or other security that is to the benefit of the Issuer, including,
without limitation, the Transfer Agreement.
THE LIQUOR ENTERPRISE
The Liquor Enterprise began immediately after the end of national Prohibition in 1933 and has continued
without interruption to date. It has been an integral part of the overall State system of alcoholic beverage control
and enforcement. The Liquor Enterprise makes spirituous liquor available to the adult public in a reasonably
convenient manner and without the types of advertising and promotions common in private industry. Ohio law
Adjustments include Licensing Section expenses and Beer and Wine Section expenses that will not be assumed by JOBS after the transfer of the
Liquor Enterprise. See Statutory Merchandising Functions.
SUMMARY OF THE TRANSFER AGREEMENT
The Issuer and JobsOhio entered into the Transfer Agreement with the State on January 4, 2013. Upon the
successful closing of the transactions contemplated in the Transfer Agreement, the State will grant an exclusive
franchise to the Issuer for a period of twenty-five years to distribute, merchandise, and sell spirituous liquor in the
State and receive all revenues and related receipts and accounts receivable related to the Liquor Enterprise (see Ohio
Revised Code 4313.01(C)), subject to earlier termination or certain other remedies described below. The State
will also transfer to the Issuer certain assets to be used in connection with the franchise, including, among other
assets, the States spirituous liquor inventory, leases for warehouse space and certain vendor contracts necessary for
the operation of the Liquor Enterprise (the Transferred Assets).
Consideration
In connection with the States grant of an exclusive franchise in the Liquor Enterprise to the Issuer and the
States transfer of certain assets to the Issuer, the Issuer will pay aggregate consideration to the State in the amount
of $1,429,946,711
. As additional consideration, the Issuer will reimburse the State for its costs incurred in
connection with the transactions, will assume certain ordinary course liabilities and payables of the State related to
the ongoing operation of the Liquor Enterprise, and will make certain deferred payments to the State as described
below.
s
t
a
t
e
w
i
d
e
s
e
n
i
o
r
L
i
e
n
L
i
q
u
o
r
P
r
o
f
i
t
s
t
a
x
-
e
x
e
m
P
t
r
e
v
e
n
u
e
b
o
n
d
s
,
s
e
r
i
e
s
2
0
1
3
a
a
n
d
s
t
a
t
e
w
i
d
e
s
e
n
i
o
r
L
i
e
n
L
i
q
u
o
r
P
r
o
f
i
t
s
t
a
x
a
b
L
e
r
e
v
e
n
u
e
b
o
n
d
s
,
s
e
r
i
e
s
2
0
1
3
b