Phillip M. Bailey

@phillipmbailey

The Louisville Arena Authority selected two major investment firms that will manage and underwrite the KFC Yum! Center's outstanding debt once a new financing deal is struck.

In a unanimous vote Friday morning, the board approved naming Bank of America Merrill Lynch as the senior manager along with Siebert, Cisneros, Shank & Co. as the co-manager. Choosing the firms is meant to help the arena authority establish a structure and improved payment plan that will keep the 22,000-seat facility financially solvent in the future.

"We're really excited to have them and we think they're the best of the best," said attorney Scott C. Cox, chairman of the arena authority.

Sixteen firms responded to the arena authority's request for an underwriter and six finalists were interviewed, according to arena officials. Bank of America Merrill Lynch was selected based upon its experience and understanding of complex structure for arena-type financing and Siebert for its ability to access distinct markets in Kentucky.

But Cox stressed to board members on Friday that selecting the underwriters does not guarantee that refunding of the Yum Center's existing bonds will take place. That will require a new agreement with the city, state and University of Louisville, which he said he has been working on for the past eight months to pay for the downtown facility's roughly $690 million debt.

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The arena authority is working with state lawmakers on amending the Yum Center's tax increment financing, or TIF, district, which is an important revenue source for the arena but it has fallen short of expectations. The board is hoping lawmakers will, among other things, expand the TIF district's lifespan to 30 years, which is a decade longer than allowed under current state law.

Metro Council approved a resolution in December giving Mayor Greg Fischer permission to negotiate new terms for the city’s part in the Yum Center’s debt. Some council members have said U of L must do more financially to help the arena, given the city has been contributing the maximum payment of about $10 million in recent years.

Council President David Yates, who is also an arena authority board member, said the resolution sent a message to U of L and state lawmakers that the city is at the table and ready to negotiate.

"This arena is more than just a first-class facility. It's a key to economic development for our city and puts Louisville on the map," he said.

Cox said all three arena stakeholders understand the gravity of the rising debt payments and interest rates and have committed to reaching an agreement.

"We've got to smooth out these payments because as well all know we're looking at some huge payments in 2029 and probably unable to service the debt by 2020," he said.

Reporter Phillip M. Bailey can be reached at 502-582-4475 or pbailey@courier-journal.com.