BRADENTON, Fla. - Jefferson County, Ala., Commissioner Jim Carns late Friday said the government had a tentative plan to restructure its $3.2 billion sewer debt program that was "very near acceptance" by creditors when the commission last week fired its top negotiators.
The county has been negotiating for months to restructure its sewer debt program, most of which is in auction- and variable-rate securities, and covered by out-of-synch swaps.
Carns, who oversees the county's Environmental Services Department and work on the sewer system, said in a detailed statement that a majority of the commission crafted a resolution to fire negotiators "in the dark of the night" without discussion among the full commission.
The commission Tuesday voted 3 to 2 to terminate its relationships with financial advisers Merrill Lynch & Co.,Porter White & Co., and the law firm of Bradley Arant Rose & White LLP. Carns and commissioner Bobby Humphryes voted against the firings.
The resolution said the trio of advisers submitted an "unacceptable" proposed restructuring plan. The county had released an outline of a plan, under Merrill Lynch's name, that suggested raising sewer rates 2.85% per year, using up to $10 million from the general fund for sewer expenses if needed as a backstop after restructuring the debt, and creating a sewer oversight board with rate-making powers. The plan was never discussed publicly or acted upon by the commission.
Carns said the proposed rate increases, backstop funding, and oversight board were "requested by rating agencies and demanded by the creditors in order to get a restored investment-grade rating and the cooperation of the creditors in a restructuring."
"Members of the commission may not like all the terms demanded of us by our creditors and the rating agencies, but we must realize that borrowing $3.2 billion, having numerous public officials implicated in illegal activity, and experiencing this type of financial stress has a price," Carns' statement said. He wants the commission to reconsider the restructuring plan.
The commission last week hired Morgan Keegan & Co. and Sterne Agee & Leach Inc. as part of the investment banking group that will help refinance the sewer debt. Goldman, Sachs & Co. is expected to be added to the team at a later date.