515ORDINANCE N0. r_.~.__
AN ORDINANCE SUBMITTING TO THE VOTERS OF THE CITY OF
WEST MEMPHIS , ARKANSAS , THE QUESTION WHETHER IT Ti[ILL
I ISSUE INDUSTRIAL REVENUE BONDS IN AN AMOUNT NOT TO
~ EXCEED $28,500,000 FO[t THE PURPOSE OF SECURING AND
DEVELOPING INDUSTRY WITHIN OR NEAR THE CITY OF WES T
MEMPHIS, ARKANSAS.
BE IT 0[tDAINED BY THE CITY COUNCIL OF THE CITY OF WEST MEMPHIS :
SECTION 1. An election is hereby called to be held at the
usual polling places in the City of West Memphis on the day of
~ b~_ _ , 1967, for the purpose of determining whether the City
of West M~emp~his will issue negotiable industrial revenue bonds under
the provisions of Act No. 9 of the First Extraordinary Session of the
Sixty-second General Assembly of the State of Arkansas for the year
1960, as amended, in an amount not to exceed $28,500,000 for the pur-
pose of securing and developing industry within or near the City of
West Memphis to be secured by a statutory mortgage on the lands and
buildings acquired and constructed from the proceeds of the said indus-
trial revenue bonds and a pledge of the revenues therefrom. A security
interest shall also be given in machinery and equipment acquired or
purchased from the proceeds of the said Industrial Revenue Bonds. The
particular Indus trial project cons ists of the acquis itian of lands ,
the construction and equipping of manufacturing buildings and storage
and sales facilities thereon, and the industrial project will be leased
to Southwest Chemical Corporation, an Arkansas corporation, for the
manufacture, storage, and sale of fertilizers, chemical products, and
other related items.
SECTIOl~T 2. The bonds will not be general obligations of the City
of West Memphis, but will be special obligations payable solely from
revenues derived from the industrial project, and secured by the mortgage
and security interests as aforesaid. The bonds may be issued ixi one or more
series, may bear such date or dates, may mature at such time or times, may
bear interest at such rate or rates, not exceeding 6% per annum, may be
sold with the privilege of conversion to an issue bearing other rate or
rates of interest as provided by said Act No. 9, and may provide such
terms for redemption before maturity as may be established by appropriate
ordinances of the City of West Memphis, which ordinances shall be con-
sistent with the provisions of the Arkansas Municipalities and Counties
Industrial Development Revenue Bond Law.
SECTION 3. Said election shall be conducted and the votes there-
at canvassed and the results declared under the law and in the manner
now provided for municipal elections, and notice of said election shall
be given by the Mayor by advertisement weekly for at least four (4)
times in some newspaper published in the City of West Memphis and having
a bona fide circulation therein, the last publication to be not less
than ten (10) days prior to the date of said election.
The ballots for said election shall be marked:
"Vote on measure by placing an "X" in the square above
the measure either for or against.
~~
FOR BOND ISSUE IN AN AMOUNT NOT TO EXCEED _____.,._
$28,500,000 - - - - - - - - - - - - - - - - - - - - -,L..-/
~~
AGAINST B Ori'D ISSUE IN AMOUNT NOT TO EXCEED ,,,,__....
$ 28 , 500 , 000 - - - - - - - - - - - - - - - - - - - - - ~~
"Bond issue in an amount not to exceed $28,500,000 under the
provisions of Act No. 9 of the First Extraordinary Session
of the Sixty-second General Assembly of the State of Arkansas
for the year 1960, as amended, for the purpose of securing
and developing industry within or near the City of West
Memphis, Arkansas, to be secured by a statutory mortgage
on the lands and buildings acquired and constructed from
the proceeds of the said industrial revenue bonds and a
pledge of the revenues therefrom. The bonds may be issued
in two or more series and delivered in two or more install-
ments, and may be sold with the privilege of conversion to
an issue bearing other rate or rates of interest as provided
by said Act No. 9, as the City Council may provide by appro-
priate ordinance.
"The particular industrial project consists of the acqui-
sition of lands, the construction and equipping of manu-
facturing buildings and storage and sales facilities thereon
(herein called the "industrial project") , and the industrial
project will be leased to Southwest Chemical Corporation, an
Arkansas corporation, for the manufacture, storage, and sale
of fertilizers, chemical products, and other related items.
"The bonds will not be general obligations of the City of
West Memphis, but will be special obligations payable solely
from revenues derived from the industrial project."
SECTION 4. A copy of this ordinance shall be given to the
Crittenden County Board of Election Commissioners so that it may place
the question on the ballot for said election, provide the proper election
officials and supplies, and canvass the vote on the question.
SECTION 5. At said election, only qualified voters of theCity
of West Memphis will have the right to vote. The result of said election
shall be proclaimed by the Mayor by publication in some newspaper pub-
lashed in the City of West Memphis and having a general circulation
therein for more than twelve (12) months last past, and his proclamation
shall advise the citizens and property owners of said City of West
Memphis that the result as proclaimed will be conclusive unless attacked
in the courts within thirty (30) days after the date of such proclamation.
SECTION 6. It is ascertained and declared that the safety and
health of the City of West Memphis are jeopardized by the lack of suf-
ficient industry and that only by action made possible by this ordinance
can the City undertake to secure and develop industry and to promote
the safety, health, and welfare of its citizens. It is, therefore,
declared that an emergency exists, that this ordinance is necessary for
the immediate preservation of the public peace, health and safety, and
that this ordinance shall take effect and be in force from and after
its pass age .
PASSED : JANUARY 5 , 196 7 .
APPROVED:.-- Ce ~'`
;,..
Mayor
ATTES T ~.,.,
r
a
C ler
MEMORANDUM OF INTENT
THIS MEMORANDUM OF INTENT entered into this day of
January, 1967, by and between the City of West Memphis, Arkansas,
by its Mayor and City Clerk, hereinafter referred to as "City",
and Southwest Chemical Corporation, a corporation organized and
existing under the laws of the State of Arkansas, hereinafter
referred to as "Company",
W I T N E S S E T H:
For the purpose of expressing their intent to cooperate
for the establishment and development of industry within or near
the City of West Memphis, it is hereby agreed between the parties
as follows:
1. The Company is anxious to establish manufacturing and
sales facilities for the production and distribution of chemical
fertilizers on lands now owned by the Company in or near the City
of West Memphis. The Company desires that the acquisition and
construction of these facilities be financed by the issuance of
Industrial Development Revenue Bonds, under provisions of Act 9
of 1960, of the laws of the State of Arkansas. .The term "facilities"
as used in this memorandum, includes not only lands, buildings, and
similar improvements, but also includes the necessary machinery and
equipment for the operation and utilization of the facilities.
2. The City is desirous of assisting the Company in locat-
ing and constructing its facilities, and wishes to cooperate in
the issuance of bonds for the necessary financing.
3. The City hereby agrees, subject to the conditions here-
inafter set forth, to expend for the costs of the facilities, in-
cluding the Cbsts incidental to the financing of the project which
includes a reserve for debt service, and certain preliminary operat-
ing expenses, not to exceed a total of $28,500,000, subject to
modification as the parties hereto may agree in the alteration of
plans and specifications.
4. The City will finance the, costs of the undertaking by
causing to be issued under the provisions of Act 9 of 1960, its
Industrial Development Revenue Bonds, in the aggregate principal
amount of $28,500,000. Said bonds are to be sold in one or more
series, and may be delivered in one or more installments, and are
to mature and bear interest as may be subsequently determined by
mutual agreement between the City and the Company. The security
for said bonds will be a statutory mortgage on the lands and build-
ings constructed thereon, the pledge of the lease rentals to be
received therefrom, and a security interest in such items of
personal property as may be procured from the bond proceeds. The
bonds will not be general obligations of the City, but will be
special obligations, payable only from the rentals of the industrial
facilities. At the present time it is not contemplated that the
bonds will be subject to conversion to a higher principal amount
at a lower interest cost, but if requested by the Company and the
purchaser of the bonds, appropriate provisions will be provided
in the ordinances for the conversion of the bonds provided that
the total principal and interest requirements remain substantially
the same as though the bonds were not converted.
5. The City will hold title to the said lands and improve-
meets and will lease them under a pure net rental lease agreement
to the Company, for a term and rental sufficient to meet the debt
service requirements of the said bonds. It is anticipated that the
principal amount of the bond issue will include the approximate
amount of $286,000 which will be used to purchase the land now
owned by the Company in or near the City of West Memphis, which
represents the actual cost of the land and the indebtedness due
on it.
6. The said lease of the lands and improvements thereon
may (if requested by the Company) include an option to purchase
the demised premises during the term of the lease, but after the
bonds become subject to redemption, for a purchase price equal to
the amount necessary to pay in full the unpaid balance of the bonds
outstanding, and at the end of the lease term at a nominal price
to be subsequently agreed upon. The said lease may also provide
such renewal options as the Company may specify, consistent with
the prior payment in full of the said bond issue.
7. So long as the title to the said land and buildings
is held by the City, the City will not levy any property tax
thereon, but commencing one year after the plant has been in
operation, the Company will pay in lieu of such taxes a sum of
money comparable to the tax which the Company would pay if it were
the owner of said lands and buildings and were situated in the City
of West Memphis. The amount of the tax shall be the same rate paid
by all property owners similarly situated in the City of West
Memphis, and shall be for the joint benefit (in proportion to the
taxes levied by each} of the ~.ocal School District, the County,
the City, and any other taxing authority levying taxes in the City
of West ? emphis .
8. All proceedings and instruments hereunder shall be
consistent with the issuance of bonds under said Act No. 9 of 1960,
and this Memorandum Agreement, and shall be subject to the approval
of t~:e City Attorney.
9. This Memorandum Agreement is conditioned upon a suc-
cessful election under Act 9 of 1960 to authorize the issuance of
the said Industrial Development Revenue Bonds. The City will
cause the election to be held as early as permitted under the
law, and will in all things proceed diligently in the financing
of the project. In the event, however, that said election shall
fail, then this Memorandum Agreement shall stand cancelled, and
neither party shall be liable to the other.
i0. The Company has, or will contemporaneously with the
execution of this Memorandum, deposit with the City the sum of
$1,000 which will be applied to defray the costs of the election
mentioned in Paragraph 9 hereof. The costs of the election shall
include the publication of all ordinances and notices in connection
therewith, the printing of ballots, and the costs of election
officials. Should the actual costs of the election be less than
the sum of $1,000 any balance remaining shall be refunded to the
Company.
11. The terms and conditions of the sale of said bonds
shall furthe~,be subject to an agreement entered into on the
day of ~~~,~~,,,,,~,, 1967, by and between the City of West
Memphis and the investment banking firm of Rowles, Winston
Corporation of Texas, which is attached hereto and marked Exhibit
"A" and made a part hereof. This agreement has been examined and
approved by the Company, and the Company represents that it has
actively participated in negotiations with said investment banking
firm, and agrees to all conditions contained in the said proposal.
The City will take such steps as requested by Rowles, Winston
Corporation of Texas, and its bond counsel, to complete all neces-
sary acts on the part of the City, and the Company agrees to promptly
perform such acts as may be required under the agreement by it.
12. In executing this agreement, the City and Company
represent that all of the terms contained in this agreement and
in the exhibits attached thereto have been fully discussed in
legally held meetings of the City Council and the Board of Directors,
respectively, and that the officers executing and attesting the
execution of this agreement are acting within the scope of their
authority under authorization of the appropriate body.
IN WITNESS WHEREOF, we have hereunto set our hands and
seals, the date first above written.
CITY OF WEST MEMPHIS, ARKANSAS
sy
Mayor
SOUTHWEST CHEMICAL CORPORATION
By
~i; V!'c~,President
ATT T:
c%"z
ecretary
Bowles, Winston Corporation
Of Texas
INVESTMENT BANKERS
2200 FIRST NATIONAL BANK BUILDING
DALLAS. TEXAS 75202
PHONE 214-748-0741
M. M. HATCHER HOUSTON OFFICE
VICE•PRESIDENT SOUTHWEST TOWER
January , 1966
Honorable Mayor and City Council
City of West Memphis, Arkansas
Gentlemen:
We have examined numerous studies and reports related
to the prospective construction of a fertilizer manufacturing
facility to be located in or adjacent to West Memphis, Arkansas.
Inf ormation which we have in our possession contemplates the
financing of the project with proceeds from the issuance of
City of West Memphis, Arkansas, Industrial Revenue Bonds to be
issued under authority granted in Section 9 of the State of
Arkansas Code.
Our studies of the report of Moore Engineers, Inc.
of Dallas, Texas, studies and proposals of the Girdler Corpora-
tion of Louisville, Kentucky, and inf ormation furnished us by
the Arkansas Industrial Development Commission, together with
background inf ormation and industry studies, it is our firm
conclusion that the construction and operation of the proposed
plant with the incorporation of some modifications and changes
is feasible and the bonds proposed to be issued. can be sold at
interest rates and maturities commensurate with the ability of
the plant to produce a cash flow in accordance with projections
of the Moore Engineers, Inc.
We would suggest the acceptance of Case II as de-
scribed in the Moore Engineers, Inc. report and the Girdler
Corporation reports as the most feasible, This case study
would, of course, be subject to modifications and changes in
keeping with changes in market conditions, costs or other
factors influencing the feasibility of the plant. The total
projected amount of bonds to be issued under Case II would be
$28,221,000 which would include total financing including a
plant operating fund as enumerated herein below.
Ammonia Plant $4,850,000
Ammonia Storage 685,000
Nitric Acid Plant 1,510,000
Prilled Ammonium Nitrate Plant 1,270,000
Prilled Urea Plant 2,850,000
Nitrogen Solutions Plant 95,000
Diammonium Phosphate Plant 1,035,000
Offsites 7,100,000
Catalysts for Nitric Acid 105,000
.j Spare parts 335, 000
Office Lab & Maintenance Shop
Equipment & Apparatus $ 85,000
Plant Safety Apparatus 25,000
Site work 50,000
Engineering 318,000
Land Cost 286,000
Financing Cost 1,400,000
Plant Operating Funds 1,500,000
3 Years Bond Interest 4,722,000
TOTAL CAPITAL REQUIRED $28,221,000
Based upon recommendations of the Engineers, it is
our belief that the Ammonia Plant and the Diammonium Phosphate
Plant and certain offsite facilities be financed in the ini-
tial stage. Financing costs, land acquisition and escrowed
interest should be included for a total of approximately
$10,000,000. The exact amount must be based upon a final
recommendation of Moore Engineers, Inc.
We propose to act in the capacity of Fiscal Agent
for the City of West Memphis, Arkansas, to plan the installments,
maturities, options, interest rates and pledges securing the
proposed bonds, to plan in conjunction with the City, its
Attorneys and Bond Counsel and Engineers the several stages
of financing.
We further propose to use our best efforts Lo place
r~re First Mortgage Revenue Bonds of the City of West Memphis
~r, the principal amount of approximately $28,500,000 to be
issued and delivered in stages to be approved by the City.
Our best effort would include preparation of necessary
brochures, planning of the financing of the several stages,
together with the Engineers, so that the anticipated cash
fyow will be sufficient to serve the debt and to provide the
necessary coverage on the part of the lessee.
Our best effort shall consist of the efforts of our
most experienced and qualified personne~ in a thorough market
offering in the sources of financing known in the financing
field, including if necessary association with other dealers
nationally recognized and experienced in the field of indus-
trialrevenue financing. Our proposal is subject to all of
the following condition s
1. A total bond issue of $28,500,000 with maturities
to be determined and approved by the City. Said bonds shall be
authorized by delivery and payment in logical installments
consistent with the facility to be constructed.
i
2. The City of West Memphis, Arkansas, shall have
entered into a contract with an acceptable lessee on a net net
lease payment of the facility to be constructed by proceeds of
each installment to furnish satisfactory assurance that the
lease payments will equal or exceed the principal and inter-
est installments as they mature and to provide for payment of
any and all other expenses to be incurred by the City, or its
agents such as the Trustee, Paying Agents, Attorneys or Con-
sultants. Said lease payment requirement may be so planned
that the first three years of installments may be somewhat
less than other installments to assure adjustments and correc-
tions usually allotted to a "shakedown" period. If the lessee
to be approved by the City and ourselves is not of national
reputation and experience in the field of fertilizer production
and distribution and having sufficient reputation to finance
the project with the approval of the City and ourselves, the
lessee shall have entered into a contract with the Girdler
Corporation of Louisville, Kentucky, or a similar firm engaged
in the construction and operation of similar facilities for a
period of not less than three years and such contract shall
provide for a guarantee of production costs and output of the
plant so that the lessee shall reasonably be expected to earn
one and one-half times (1 1/2) annual lease payment requirement.
3. A national bank with full trust powers shall have
entered into an Indenture of Mortgage and Deed of Trust cover-
ing the properties so that the annual lease payments be re-
quired in four equal installments so arranged that they will be
required immediately following the production season and coinci-
dental with the collection from sales and accounts receivable
in the fertilizer production season.
4. The Southwest Chemical Corporation, or a surviving
successor shall have obtained through the sale of stock in its
cooperative capacity, sufficient "take or pay" contracts to
insure demand at current market prices for 60~ of each stage
of the plant capacity or a sufficient amount to insure payment
of the lease payments to the City of West Memphis through sale
of fertilizer to the satisfaction of the City of West Memphis
and ourselves.
5. One Hundred percent (100%) of the funds derived
from the delivery and sale of the proposed bonds (with the ex-
ception of the financing cost and lawyers fees) be escrowed
with the Trustee Bank to be paid only upon Engineer's estimates
in installments as the plant is constructed with the exception
of required payments from the fund such as engineering, land
costs, bond interest and operating funds which may be withdrawn
upon written request of the City Council of West Memphis and
distributed in accordance with the terms of the Indenture
securing the bonds.
6. That a contract shall have been entered into
prior to and delivered with the bonds with a reputable con-
tractor who shall have posted an acceptable performance bond
to insure completion of that portion of the plant to be
financed by the installment authorized.
7. The bonds shall be authorized to bear a rate of
interest of six percent (6,°6) per annum, but our best effort
will be to place the bonds at a rate of interest consistent
with the market and other issues of similar characteristics
and security.
8. The Indenture of Mortgage and Deed of Trust shall
have been prepared by Rose, Meek, House, Barron, Nash &
Williamson of Little Rock, Arkansas, containing the usual
provisions required in securing and marketing bonds of similar
nature and including insurance coverage, audits, legal, inde-
pendent engineering inspection and maintenance, and all con-
tracts of the Southwest Chemical Company be assigned to the
Trustee while any debt is outstanding.
9. Simultaneously with delivery and payment of each
installment of bonds there shall be delivered to us the unqual-
ified approving opinion of Rose, Meek, House, Barron, Nash &
Williamson of Little Rock, Arkansas.
10. Simultaneoulsy with payment of each installment
of bonds to the purchaser at a price of par and accrued inter-
est we shall be paid from the proceeds of the issue Two and one-
half percent (2 1/2~) of the total amount of bonds so issued.
11. The lessee shall have entered into a satisfac-
tory contract for a supply of natural gas and evidence of
availability of raw products necessary for successful opera-
tion of the facilities.
With our commitment or evidence of commitment, we
will agree to pay printing of the bonds, preparation and print-
ing of the Indenture, delivery of the bonds and required
approving legal opinion.
.'
Should we fail to furnish satisfactory evidence of
commitments for the agreed stages of financing, we shall be
due nothing for our efforts,
Respectfully submitted,
ROWLES, WINSTON CORPORATION
OF TEXAS ~
.. ; ,L
"' ~'~~
BY ~ ~~ ~ C
Vice President
ADOPTED AND APPROVED this the ~ day of ,
19 ~.
CITY OF WEST MEMPHIS, ARKANSAS
BY
Mayor, City of West Memphis,
Arkansas
ATTES
ty t-cry-, City of W Memphis
Arkansas
APPROVED AS TO FORMz
/s / W _ H _ nrr.r.e urrnrry
City Attorney, City of West
Memphis, Arkansas