Mendocino County Is Raising a Glass to Investors

Mendocino County really wants to refinance some of its bonds. So much so that it’s offering investors locally produced wines as an incentive for exchanging their debt.

The county, about 90 miles north of San Francisco at the edge of California’s wine country, is throwing in wine in a bid to lure individual investors, who own about half the remaining $6 million of lease-backed certificates of participation it sold in 1998 for a refinancing.

The gift “provides a distinctly local flavor to an otherwise technical process,” said Robert Apfel, the county’s tender consultant and president of Bondholder Communications Group in New York.

Bondholders can decide by Aug. 1 whether they want to tender their certificates to the county for a cash price of par, or 100 cents per dollar face amount of debt, or exchange them for new certificates with higher interest rates and an extended maturity.

Each investor who exercises either option will receive six bottles of premium wines from Fetzer Vineyards, the county said. Fetzer wines are a brand of Brown-Forman Corp.

The existing certificates, rated “AAA” based on bond insurance, mature from 2001 to 2006. The 2006 bond has a 4.3% coupon.

An insured certificate in today’s market yields roughly half a percentage point higher for that maturity, according to Bloomberg Fair Value.