Northern Tobacco Securitization Corporation

In 1998, the four largest U.S. cigarette manufacturers ended a litigation effort against them by signing a Master Settlement Agreement (MSA) with Alaska and 45 other states. The MSA outlined certain steps the tobacco manufacturers had to take to reform the tobacco industry, increase public awareness of tobacco-related health concerns, and reduce youth access to tobacco products. The Agreement also established a stream of tobacco settlement payments to be shared among Alaska and the other settling states. These revenues are calculated based on a variety of factors, including domestic cigarette shipments in future years.

Once the MSA was finalized, the settling states had to develop strategies for managing and spending their MSA monies. In Alaska, the decision was taken by the 2000 Alaska State Legislature and then-Governor Tony Knowles to securitize a portion of the MSA revenue stream so that monies could be made immediately available to fund needed public projects. The Alaska Housing Finance Corporation (AHFC) was authorized to create a subsidiary corporation to issue bonds that would be secured by a portion of Alaska's revenue payments under the MSA. Proceeds from the sale of the bonds would be used to fund public projects and infrastructure improvements.

In response, AHFC's Board of Directors, at its annual meeting on August 30, 2000, approved the creation of the Northern Tobacco Securitization Corporation (NTSC), a nonprofit public corporation, to issue bonds on behalf of the State of Alaska. AHFC is the sole member of NTSC. The Board of Directors of NTSC consists of the Commissioners of the Alaska Departments of Revenue; Health and Social Services; and Commerce, Community and Economic Development; or their designees; and two members of the public appointed as independent directors.

NTSC is a distinct entity with its own legal existence independent of, and separate from, AHFC and the State of Alaska. Neither the State of Alaska nor AHFC is obligated to meet debt service requirements on NTSC's bonds.

On October 13, 2000, NTSC issued its $116,050,000 Tobacco Settlement Asset-Backed Bonds, Series 2000. Proceeds from the sale of the Series 2000 bonds were used to finance capital projects as appropriated by the Alaska State Legislature. The Series 2000 bonds were secured by the right to receive 40 percent of Alaska's revenues under the MSA.

On August 2, 2001, NTSC issued its $126,790,000 Tobacco Settlement Asset-Backed Bonds, Series 2001. Proceeds from the sale of the Series 2001 bonds were used to finance capital projects as appropriated by the Alaska State Legislature. The Series 2001 bonds were secured by the right to receive an additional 40 percent of Alaska's revenues under the MSA, separate and apart from the initial 40 percent related to the Series 2000 bonds.

On August 17, 2006, NTSC issued its $411,987,859.60 Tobacco Settlement Asset-Backed Bonds, 2006 Series A, B and C. Proceeds from the sale were used to fully defease the Series 2000 and 2001 bonds, and to finance additional capital projects as appropriated by the Alaska State Legislature. The Series 2006 bonds are secured by the right to receive 80 percent of Alaska's revenues under the MSA.

Northern Tobacco Securitization Corporation

P.O. Box 102245
Anchorage, AK 99510-2245

907-330-8396
finance@ntscak.us