This is about an article at the website of Bloomberg Businessweek. Business Week was formerly an independent magazine, now it’s part of the Bloomberg international news agency, headquartered in New York. Their article is Noah’s Ark Depends on Faith in Default-Plagued Debt: Muni Credit.
From our recent post, Ken Ham’s “Ark Encounter” Bonds, you already know about the bonds being issued to finance the proposed Ark Encounter project, which is owned by a company controlled by Answers in Genesis (AIG). AIG is the on-line ministry of Ken Ham (ol’ Hambo), the ayatollah of Appalachia. It also owns and operates the infamous, mind-boggling Creation Museum.
It appears that Bloomberg has seen all the documents, and they routinely report on the bond market. Their analysis is far more sophisticated than ours. They say, with bold font added by us:
Given the default history of unrated municipal debt, investors may have to pray for the success of bonds being sold to build a full-scale replica of Noah’s Ark.
The northern Kentucky city of Williamstown plans to offer $62 million of securities next month for affiliates of Answers in Genesis, a Christian nonprofit that operates the Creation Museum upstate. Proceeds will help build a 510-foot (155.4-meter) wooden ship, the centerpiece of a planned biblical theme park called “Ark Encounter.” Bond documents project the venue will attract at least 1.2 million people in its first year.
$62 million? We had estimated that the total of the bond issue was only around $40 million. Let’s see what else they say:
Investors who buy $100,000 of the taxable securities will get a lifetime family pass, bond documents show. Yet they may not get their money back, given the track record of unrated munis. Of the 438 issuers currently in default, 93 percent initially offered bonds without a credit grade, according to Concord, Massachusetts-based Municipal Market Advisors.
You gotta have faith. They discuss some similar bond issues that failed, and then say this:
Industrial-development bonds, like those for Ark Encounter and the Nebraska venue, represented 28 percent of the failures, the most of any segment. “The history of theme parks and specialized projects like these has not been very good,” said Triet Nguyen, a managing partner at Axios Advisors LLC, a municipal-research company. “This is the first one I’ve seen in a while that reminds me of those debacles from the early days of the high-yield market.”
It doesn’t look like they’re optimistic about Hambo’s bonds. Let’s read on:
The documents cite at least 39 risks to investors, ranging from the potential for the animals to catch infectious diseases to the unclear constitutionality of tax incentives for a biblically themed attraction. There’s also no assurance that projected results, which are based on data gathered as early as 2008, will materialize, bond statements say. Nor is Answers in Genesis backing the debt. Bondholders’ sole revenue stream comes from money spent at Ark Encounter. The park “may never achieve positive cash flow,” which documents say would lead to default.
That sounds pessimistic, but documents that accompany the issuance of securities are required to list all the risk factors. The lawyers always toss everything in, in order to avoid being accused of misleading investors. Bloomberg knows that, but they’re definitely not drooling over this deal.
Then they discuss the Creation Museum and offer this interesting bit of news:
Attendance has declined every year since the museum opened in 2007, offering documents show.
There have been rumors about declining attendance, but Hambo has never admitted it before. The lawyers must have insisted on that disclosure. That’s how it is when one is issuing securities. All the skeletons have to come out of the closet.
Okay, that’s enough excerpts. You can click over to Bloomberg and read it all. Then, go ahead and buy a few of Hambo’s bonds if you like. What could go wrong?
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