Resolution No. 93931 RESOLUTION NO. 9393
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3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON AMENDING RESOLUTION NO. 9107 REGARDING THE
4 ENGAGEMENT OF LEHMAN BROTHERS INC. FOR FINANCIAL
ADVISORY SERVICES REGARDING THE MALBURG GENERATING
5 STATION
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711 WHEREAS, the City of Vernon (the "City") is a municipal
8 corporation and a chartered city of the State of California organized
9 and existing under its Charter and the Constitution of the State of
10 California; and
1111 WHEREAS, on August 16, 2006, the City Council of the City of
12 Vernon (the "City Council") adopted Resolution No. 9107 approving and
13 authorizing the execution of a Letter Agreement dated August 4, 2006
14 with Lehman Brothers Inc. ("Lehman Brothers") to provide financial
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advisory
services to
the
City in connection with potential transactions
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regarding
the City's
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MW Malburg Generation Station located in the
17 City of Vernon and associated real and personal assets owned by the
18 City, including Power Purchase Agreements, transmission assets and
19 rights and generation assets (collectively, the "Malburg Plant"); and
2011 WHEREAS, Lehman Brothers, financial advisor to the City in
21 connection with the sale of the Malburg Plant, has had discussions with
22 the City Council regarding the potential of Lehman Brothers providing
23 acquisition or "staple" financing ("acquisition financing") to
24 potential buyers of the Malburg Plant; and
25 WHEREAS, the City Council has considered, and reviewed with
26 the City's legal counsel, the fact that there are certain conflicts of
27 interest inherent in providing acquisition financing to potential
28 buyers while concurrently providing sell -side financial advisory
1 11services; and
2 WHEREAS, the City Council, along with the City's legal
3 counsel, has considered the benefits associated with Lehman Brothers'
4 providing acquisition financing, including a more competitive auction
5 process that often results from increased availability of financing to
6 potential buyers, expedited timing and cost -savings that often results
7 from the elimination of multiple lender due diligence, greater
8 confidentiality of the process resulting from a smaller number of
9 potential lenders, and greater certainty of closing; and
10 WHEREAS, the City Council has reviewed all of the facts set
11 forth in this resolution and believes that Resolution No. 9107 should
12 be amended to provide a more express authorization from the Council to
13 provide for acquisition financing to potential buyers of the Malburg
14 Plant.
15 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
16 CITY OF VERNON AS FOLLOWS:
17 SECTION 1: The City Council of the City of Vernon hereby
18 finds and determines that the recitals contained hereinabove are true
19 and correct.
20 SECTION 2: The City Council of the City of Vernon hereby
21 finds and determines as follows:
22 A. The City Council understands that Lehman Brothers'
23 employees who are responsible for the acquisition financing will not be
24 acting on behalf of the City, will not constitute part of the City's
25 financial advisory team, and will not be providing advice to the City
26 in connection with Lehman Brothers' financial advisory engagement.
27 B. If Lehman Brothers provides acquisition financing to a
28 buyer of the Malburg Plant, and the City requires a fairness opinion in
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1 connection with such transaction, the City understands that Lehman
2 Brothers will be unable to provide such fairness opinion, and it will
3 be necessary for the City to obtain a fairness opinion from an
4 independent third party firm who is not involved in the acquisition
5 financing.
6 C. After considering both the potential conflicts and
7 benefits associated with Lehman Brothers providing acquisition
8 financing while acting as a financial advisor to the City, the City
9 Council has determined it to be in the best interests of and so request
10 that Lehman Brothers offer acquisition financing to potential buyers in
11 connection with the sale of the Malburg Plant.
12 SECTION 3: The City Council of the City of Vernon hereby
13 amends Resolution No. 9107 to authorize Lehman Brothers to provide
14 acquisition financing to potential buyers in connection with the sale
15 of the Malburg Plant under the terms and conditions of the Letter
16 Agreement.
17 SECTION 4: The City Council of the City of Vernon hereby
18 authorizes and empowers the City Administrator, or his designee, to
19 execute such documents and to take such actions as may be necessary or
20 convenient to carry out the City's obligations hereunder and to effect
21 the purposes of the Letter Agreement and the transactions therein
22 authorized.
23 SECTION 5: The City Council of the City of Vernon hereby
24 directs the City Administrator, or his designee, to deliver one fully
25 executed Resolution to Lehman Brothers.
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1 SECTION 6: The City Clerk of the City of Vernon shall
2 certify to the passage of this resolution, and thereupon and
3 thereafter the same shall be in full force and effect.
4 APPROVED AND ADOPTED this 27th day of August, 2007.
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ATTEST:
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12 CIA
13 jCR�SiEN CNUMn'�o� Aapvty C;ty Clerk
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Name• Leonis C. Malburg
Title: Mayor Matv�r Dr m
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1 STATE OF CALIFORNIA )
2 ) ss
COUNTY OF LOS ANGELES )
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4 I, KRISTEN ENOMOTO, Deputy City Clerk of the City of Vernon, do
5 hereby certify that the foregoing Resolution, being Resolution No.
6 9393, was duly adopted by the City Council of the City of Vernon at a
7 special meeting of the City Council duly held on Monday, August 27,
8 2007, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of
9 the City of Vernon.
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11 'e
KRIS EN
12 E OMO T Deputy City Clerk
13 (SEAL)
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SUPPORTING
DOCUMENTS
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: September 4, 2007
TO: Donal O'Callaghan, Director of Light & Power
FROM:/ Nelly Giron, City Clerk
RE: Resolution No. 9393 - A Resolution of the City Council of
the City of Vernon Amending Resolution No. 9107 Regarding
the Engagement of Lehman Brothers Inc. for Financial
Advisory Services Regarding the Malburg Generating Station
Transmitted herewith is a copy of Resolution No. 9393, referenced
above, which was approved by City Council on August 27, 2007.
Thank you.
NG:dr
c: Resolution File No. 9393
Agreement File No. 06-092