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Panel Weighed for Florida Bridge Default

BRADENTON, Fla. — The Santa Rosa Bay Bridge Authority board will work with bondholders to establish a creditors' committee in hopes of restructuring $115 million of debt for a toll bridge in northwest Florida that is headed for default next year.

The cooperative spirit emerged at the board's last quarterly meeting of the year Wednesday after representatives from bond insurer ACA Financial Guaranty Corp. said that they are trying to contact 51% of the bondholders and assist the bond trustee in getting a creditors' committee formed to explore restructuring.

"Nothing can happen unless 51% of the bondholders are in agreement," said ACA managing director Maria Cheng. "Most of these bonds are held in retail form and a lot are held in Florida."

Cheng said her firm would like to work with the trustee, the Bank of New York Mellon, to hire a financial adviser such as Macquarie Capital Inc.

ACA insures 23% of the authority's debt, or approximately $22 million, and filed a material event notice last month seeking bondholders' interested in restructuring. If enough bondholders agree, the bond trustee would be responsible for creating a creditors' committee.

The authority in 1996 sold $75.5 million of then-investment-grade rated current interest bonds maturing in 2028 and $19.4 million of capital appreciation bonds maturing between 2005 and 2028 to build the 3.5-mile-long Garcon Point Bridge that has never met traffic projections. The bonds are rated at junk levels now and the authority owes more than $22 million to the Florida Department of Transportation for deferred expenses on a loan, operations and maintenance on the bridge.

With only $2.3 million in reserves and toll revenues insufficient to pay debt service, the authority is expected to default on payments next year.

While the authority has no funds to explore restructuring the debt, a majority of bondholders could direct the trustee to reallocate bond proceeds and hire a financial adviser, authority attorney Roy Andrews advised board members.

Andrews indicated that Macquarie would be a good candidate for financial adviser because it is a large international firm that has worked with FDOT on several projects. He noted that Macquarie is working with the Connector 2000 Association Inc., which put its South Carolina toll road in Chapter 9 bankruptcy in June.

Ed Albert, a managing director and co-head of restructuring advisory business at Macquarie, said the bridge authority's situation should be a "little easier" to resolve than the Connector's bankruptcy.

Macquarie is available to work on Santa Rosa's financial problems, Albert said, adding that the firm can "get started at the group's convenience."

Authority chairman Garnett Breeding thanked ACA and Macquarie for coming to the board with a plan and taking a step that "makes sense." The board will schedule additional meetings this year to address the situation, if necessary, he said.

The Connector 2000's debt includes $237.8 million of senior bonds for which U.S. Bank NA is trustee. Another $90.9 million is subordinate debt administered by HSBC Bank USA NA.

Macquarie Capital was hired last year by U.S. Bank to analyze restructuring options for the bondholders, according to an October 2009 note U.S. Bank sent to senior bondholders.

Macquarie is paid a monthly advisory fee partly from the Connector's toll revenues. Its total fees could range from $750,000 to $4.6 million based on a sale of the Connector that would fully repay senior bonds plus accrued interest.

Approximately $20 million of the debt is insured by ACA Financial.

The Connector is a 16-mile toll road around Greenville, S.C., that has failed to produce the toll revenues that were initially estimated. A default on the bonds occurred Jan. 1 and the Connector 2000 filed for bankruptcy in June.

The South Carolina Department of Transportation, which maintains and repairs the toll road, is challenging the Connector's Chapter 9 bankruptcy filing, claiming that the issuer is not a municipality. A trial is scheduled for Dec. 6.

SCDOT has estimated its bill at $61 million over the next 41 years, but the debt is subordinate to all bondholders.

Patrick Temple-West contributed to this story

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