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CONTROLLER SELLS $2 BILLION IN REVENUE NOTES; CALLS THE SALE 'INSURANCE AGAINST IOUs'

 LOS ANGELES, June 16 /PRNewswire/ -- California State Controller Gray Davis today announced the successful sale of $2 billion in revenue anticipation warrants (RAWs).
 "Today's sale is good news for California," said Davis. "It means we now have the financial insurance we need to avoid the embarrassment of IOUs this year. California will be able to pay all authorized bills even if the budget is late."
 "Last year when the Legislature failed to pass a budget on time, we had no plan in place for dealing with our cash crisis," added Davis. "This year we have a responsible plan approved by the governor."
 Last year, Gov. Wilson allowed the controller to borrow $475 million, only enough money to pay bills through June 30, the end of the fiscal year. When no budget was passed by that date, the result was IOUs. This year the governor reversed his position and authorized today's sale of $2 billion in RAWs.
 The controller awarded the RAWs today to J.P. Morgan, Bank of America, First Boston Corp. Lehman Bros., Merrill Lynch and Morgan Stanley through a competitive bidding process. The warrants may be redeemed anytime between Aug. 10 and Dec. 23, 1993, subject to a 15-day call period. The actual repayment date will depend on expenditures within the 1993-94 state budget. Even without a budget, the state is expected to have enough cash on hand to repay the warrants on Dec. 23. The warrants have an annual average net interest rate of 2.14 percent. California will pay approximately $21 million in interest on the warrants if they are outstanding for six months.
 "In spite of the state's financial problems, I am pleased that Wall Street gave the RAWs high ratings last week which led to today's successful sale," Davis noted. "The warrants are a good investment for investors and a good deal for California taxpayers."
 The RAWs received a MIG 1 rating from Moody's Investor's Service, an SP 1 rating from Standard and Poor's and an F 1-plus rating from Fitch Investors Service.
 Last year Controller Davis was forced to issue $3.8 billion in IOUs during a record 63-day budget stalemate. Up until then, California had not issued IOUs, called registered warrants, since the Great Depression in the 1930s.
 -0- 6/16/93
 /CONTACT: Carol Thorp or Edd Fong of the Office of the State Controller, 916-445-1895/


CO: California Office of the State Controller ST: California IN: FIN SU:

TM-SG -- SF010 -- 2706 06/16/93 15:17 EDT
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Date:Jun 16, 1993
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