SENATE BILL NO. 510
AN ACT T0 AMEND CHAPTER 74, TITLE 29 OF THE DELAWARE CODE RELATING TO THE AUTHORITY OF THE ISSUING OFFICERS TO ISSUE REFUNDING BONDS TO REFUND OUTSTANDING GENERAL OBLIGATION BONDS OF THE STATE OF DELAWARE.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (three- fourths of all members elected to each House thereof concurring therein):
Section 1. Amend Chapter 74, Title 29 of the Delaware Code by adding to Section 7402 a new subsection (c) to read as follows:
"(c) Any other law to the contrary notwithstanding. the General Assembly hereby authorizes the issuance, from time to time, of general obligation bonds to refund, prior to their stated maturity, all or any portion of the outstanding general obligation bonds issued by the State and costs incidental thereto: provided however, that the present value of the aggregate principal and interest payments of the refunding bonds must be less than the present value of the aggregate principal and Interest payments on the bonds to be refunded.
(1) The present value of the aggregate principal and interest payments of the refunding bonds and of the bonds to be refunded shall be discounted at the effective interest rate on the refunding bonds, calculated based on the internal rate of return.
(2) Refunding bonds may be issued in a principal amount which exceeds the principal amount of the bonds to be refunded, so long as the present value of the aggregate principal and interest payments of the refunding bonds are less than the present value of the aggregate principal and Interest payments on the bonds to be refunded.
(3) The provisions of Section 7423 of this Chapter shall not apply to refunding bonds issued in accordance with, and under the limitation of, this subsection.
(4) The issuing officers, by resolution adopted by unanimous vote and without further authorization of the General Assembly, may resolve to issue refunding bonds authorized by this subsection at any time prior to the final maturity of the bonds to be refunded. Subject to the limitations imposed by this susbsection, but any other law to the contrary notwithstanding, refunding bonds may be sold at public or private sale, above or below par, with principal installments payable at such times and in such amounts and on such other terms and conditions as the issuing officers determine. Without limiting the foregoing, refunding bonds are not required to pay current interest for all or any portion of the issue, and thus may be "zero coupon" or "capital appreciation" bonds.
(5) No refunding bonds may be issued unless all or a portion of the proceeds of the refunding bonds are deposited irrevocably in an account pledged to pay, and are sufficient together with any other available assets in such account to meet, the payment when due of the principal, premium (if any), and interest on the bonds to be refunded. The proceeds of the refunding bonds pledged to pay the bonds to be refunded may be invested in direct obligations of, or obligations the principal of and interest on which arc guaranteed by, the United States Government."
Approved June 10, 1986.