Wells Fargo resigned Friday as lead underwriter for a potential $500 million bond sale for the Oklahoma Turnpike Authority in the wake of its placement on the state treasurer's list of companies banned from government contracts.
Wendy Smith, OTA's finance and revenue director, said in an email Wells Fargo's resignation came even though the bank disagrees with the Treasurer's decision.
The Authority has selected RBC Capital Markets as its replacement as lead underwriter on the issue, she added.
The 13 financial institutions on the list released Wednesday were determined to be boycotting the oil and gas industry and are thereby ineligible for state and local government business under a 2022 law. Wells Fargo, which was picked last summer to head the OTA bond deal, JPMorgan Chase and Bank of America were the only municipal bond investment banks to be tagged as boycotters.
Initial financing from a $500 million bond sale led by Wells Fargo for the Oklahoma Turnpike Authority’s $5 billion ACCESS (Advancing and Connecting Communities and Economies Safely Statewide) Oklahoma has been delayed.
Oklahoma Department of Transportation
The Energy Discrimination Elimination Act of 2022 took effect Nov. 1, months after OTA assembled the underwriting team for the second senior lien revenue bond issue, which would begin financing for a $5 billion, 15-year turnpike extension project known as ACCESS (Advancing and Connecting Communities and Economies Safely Statewide) Oklahoma. Stifel, Nicolaus & Company; Morgan Stanley; BOK Financial; and Raymond James were selected as co-managers.
Litigation brought by homeowners in the path of the extensions delayed the bond sale, which remains before the Oklahoma Supreme Court, which has been asked by OTA to validate the debt. If the bonds are validated, OTA would have to return to the state's Council of Bond Oversight because that body's conditional approval of the debt expired in February.
Last month, OTA halted construction work related to the ACCESS project over concerns about its access to the municipal bond market.
In March, Oklahoma Attorney General Gentner Drummond ordered an audit of the OTA, citing concerns he heard from lawmakers, state employees, and others about "improper transfers between the OTA and the Department of Transportation; improper contracting and purchasing practices; and inadequate internal financial controls."
The Republican-controlled House and Senate have passed slightly different versions of a bill allowing legislative leaders to appoint four of the six OTA board members, shortening their terms to six years from eight, and prohibiting them from voting on items in which they have a direct financial interest.
The Long Island bank is the latest financial institution to use new equity to restructure its balance sheet and unload low-yielding assets. Its stock price tumbled after the shares were priced at a considerable discount.
Affirm partners with Sixth Street to sell its buy now/pay later loans to the investment firm; Associated Banc-Corp promotes Steven Zandpour to deputy head of consumer and business banking; Visa Direct speeds up its money transfers; and more in this week's banking news roundup.
Banks will feel the fallout from a court's decision to strike down a Nasdaq rule that would have mandated more disclosure about the racial and gender composition of corporate boards.
The bank said it redeployed proceeds from the sale into high-yielding investments. It also said it would end an employee pension plan to curb expenses.
A close result was complicated by an hour-long adjournment of the New York-based company's annual meeting that angered dissident investors and left them mulling legal action.
