Updated Monday, 4/19/2021, 6:07 p.m.
The Wisconsin-based Public Finance Authority (PFA) dropped out of the bond issue for an Alabama prison project Monday after the lead underwriter quit the deal.
The exit of the PFA along with Barclays, the lead underwriter, and a secondary underwriter followed a campaign by critics of the Alabama project that targeted the authority as well as the underwriters. The bond issue was to finance a pair of privately owned prisons in the state.
“During the Request for Proposal (RFP) process, Barclays as lead underwriter for this project approached PFA to serve as a conduit issuer on the project,” said Andy Phillips of the Milwaukee law firm von Briesen & Roper and general counsel to the PFA, in a statement issued Monday afternoon. “Since then, business dynamics have changed and the lead underwriter that brought PFA into this project has chosen to leave this deal. As a result, PFA is no longer part of this transaction.”
The authority had been designated to issue bonds underwritten by Barclays. Barclays withdrew as underwriter after the United Kingdom-based banking concern was ejected from the American Sustainable Business Council and its affiliate, the Social Venture Circle, according to Bloomberg News, which first reported the bank’s withdrawal from the transaction.
The Alabama project entails the building of three new prisons, two of them to be built and owned by CoreCivic, a private prison company, which would lease the facilities to the state for 30 years at a cost of up to $3.2 billion according to some estimates. CoreCivic stated Monday it would continue to pursue the transaction, Reuters reported.
Both Barclays’ involvement and that of the PFA have been the focus of a campaign from investors and activists to reverse the deal. Two years ago Barclays said it would stop investing in the private prison industry, joining a number of other banks. Critics contend that Barclays’ role in the Alabama project contradicted that earlier pledge.
The original bond issue proposal was to raise more than $630 million. Barclays lowered the amount to $436 million on Thursday, April 15.
In a statement Monday, a Barclays spokesperson told Bloomberg: “We have advised our client that we are no longer participating in the transaction intended to provide financing for correctional facilities in the State of Alabama.” The statement added: “While our objective was to enable the State to improve its facilities, we recognize that this a complex and important issue. In light of the feedback that we have heard, we will continue to review our policies.”
On Sunday, activist groups sent an email to officials with the PFA urging them to withdraw from the Alabama project as well.
“We are deeply concerned by your role in attempting to finance CoreCivic to build ‘mega-prisons’ in Alabama and we urge you to do everything in your power to immediately cancel this ill-fated deal,” states the letter, which went out over the names of 11 organizations, including Presente.org, the Alabama Communities Not Prisons coalition and Candide Group, a social-justice-focused investment organization.
Matt Nelson, executive director of Presente.org, a Latinx digital activis group, welcomed word of the PFA’s departure from the transaction Monday.
“I think that this has to be a moment of pause for the PFA and anyone who supports the PFA to evaluate what investments are at clear odds with their purpose, and private prisons need to be on the top of that list,” Nelson told the Wisconsin Examiner. “The people of Wisconsin and Alabama need to know that the PFA believes that the industry is toxic to their mission.”