Harrisburg – At a special meeting today convened earlier this week by the Pennsylvania Liquor Control Board (PLCB), the Board approved contracting with financial advisors and legal counsel to pursue entering into a contract that would monetize future earnings of the PLCB.
The PLCB is pursuing a revenue-backed contract to deliver $1.25 billion in up-front revenue to the General Fund by capitalizing on the PLCB’s long-term profitability, at the request of Governor Wolf.
Through a new statement of work issued under an existing state contract, the PLCB will engage Public Financial Management, Inc. (PFM) to perform financial advisory services to the Board related to the transaction.
The Board will also amend its existing contract with the law firm of Eckert Seamans Cherin & Mellott, LLC to provide for legal representation of the Board in connection with the transaction.
"Today’s action is the first real step in pursing securitization in support of providing much-needed revenue to balance the state budget,” said Board Chairman Tim Holden. “Now that we have formally engaged experts to guide us through this transaction, we can get to work developing the details and bringing the financing to market.”
“The next few weeks will require a lot of hard work by our newly hired experts and our own team as we develop an offering that will appeal to the financial market as an attractive investment,” said Board Member Michael Newsome. “There’s a great deal of effort and analysis in front of us, but we maintain hope that we could execute a deal by year’s end.”
Both contracts were approved through a split vote.
“Considering the substantial size and length of this financing, my concern with these contracts and the monetization proposal as a whole is the speed with which they have been pursued,” said Board Member Mike Negra, who cast the dissenting vote on both contracts. “I respect the decision of the majority, however, and I will support the agency’s work in developing this transaction.”
Next steps in the process will likely include competitive procurement of underwriters, an action the Board would consider in an upcoming public vote.
The PLCB regulates the distribution of beverage alcohol in Pennsylvania, operates more than 600 wine and spirits stores statewide and licenses more than 20,000 beverage alcohol producers and retailers. The PLCB also works to reduce and prevent dangerous and underage drinking through partnerships with schools, community groups and licensees. Taxes and store profits – totaling $15.8 billion since the agency’s inception – are returned to Pennsylvania’s General Fund, which finances Pennsylvania’s schools, health and human services programs, law enforcement, and public safety initiatives, among other important public services. The PLCB also provides financial support for the Pennsylvania State Police Bureau of Liquor Control Enforcement, the Department of Drug and Alcohol Programs, other state agencies and local municipalities across the state. For more information visit www.lcb.pa.gov.
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