Senior Debt Financing

Not-for-profit organization recapitalizes to retire outstanding taxable debt

The Colonial Williamsburg Foundation is the not-for-profit organization that preserves, interprets and presents the restored 18th-century revolutionary capitol of Virginia. It also owns and operates a contiguous resort with 1,000 guest rooms, 10 restaurants, 45 holes of golf and a spa and fitness center. In 2009, during a period of great economic and financial uncertainty in the capital markets, the Foundation had $260 million of taxable bank-issued debt maturing that November. The Foundation was seeking to refinance this debt with a long-term, fixed-rate debt structure.

After considering multiple forms of capital, including a public issuance of debt, the Foundation chose Prudential Capital Group's proposal. This proposal included one additional private lender and provided fixed-rate debt with maturities and covenants that offered flexibility to the Foundation to invest its endowment assets with a long-term return focus. Additionally, through multiple conversations with Prudential Capital's existing clients, the Foundation gained strong comfort in Prudential Capital's ability to execute and deliver the proposed financing during the financial turmoil in the fall of 2009.

The transaction provided total funding of $275 million, with $160 million provided by Prudential Capital and $115 million provided by its lending partner. The transaction closed within 40 days of commitment and provided the capital necessary to retire the Foundation’s outstanding taxable debt. Furthermore, the strategic nature of the debt provided by Prudential Capital allowed the Foundation to match its long-term assets with an offsetting long-term liability.

This transaction highlights the confidence that the Colonial Williamsburg Foundation had in Prudential Capital's ability to deliver compelling financial solutions for not-for-profit institutions, as well as organizations that present a complex financial profile that differs from a for-profit entity.