FRANKFORT, KY. (WDRB) -- The Louisville Arena Authority cleared the final regulatory hurdle Tuesday in its effort to refinance the KFC Yum! Center's debt, getting unanimous approval from a state legislative panel.

The Kentucky General Assembly's capital projects and bond oversight committee voted 7-0 in support of the arena authority's plan, which calls for issuing up to $450 million in new bonds by the end of the year.

The arena authority -- a 15-member board appointed by Kentucky's governor and Louisville's mayor -- could receive Wall Street analysts' view of the proposal by the end of the month, said Scott C. Cox, the board chairman.

Arena officials hope to get an "investment-grade" rating that would allow for greater savings over the life of the new bonds and more affordable annual payments on the debt.

But the move to finalize new bonds has been complicated by the revelations last month that the University of Louisville men's basketball team -- the Yum! Center's main tenant -- is tied to a federal investigation into payments to recruits.

With U of L already on NCAA probation for other violations, Moody's Investors Service warned in an October 5 research note that a "worst case scenario could include a suspension of play for an unknown length of time" and a loss of roughly 20 guaranteed home games a year.

But Cox told lawmakers he doesn't believe such a punishment -- an NCAA "death penalty" -- would happen.

"We've also worked hard to try to learn or predict what the NCAA is going to do," Cox said. "We've been reassured by many different people, including attorneys who represent schools and individuals before the NCAA, that the death penalty is not going to happen."

Rep. Phil Moffett, R-Louisville, questioned arena advisers about whether the planned refinancing would still go forward if they don't get the investment-grade rating.

"It's uncertain, to be very candid," said Eric Rockhold of Bank of America Merrill Lynch, the arena authority's underwriter. But, he added, he is confident that bond insurer Assured Guaranty will be "able to assist us."

Cox said in an interview that a deal would move forward even if the arena authority doesn't get the rating it's seeking. But he noted that the arena's financial advisers have worked with Assured Guaranty to craft bond insurance "to make it more likely that we get the highest possible rating."

The yearlong effort to refinance the bonds comes as the arena authority prepares to face a series of escalating payments on the bonds issued in 2008 to build the Yum! Center.

Arena officials say they won't be able to make those payments unless the outstanding debt is refunded and replaced with new bonds.

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