BRADENTON, Fla. — After nearly 10 months of inaction, investors of the defaulted bonds issued by North Florida’s Santa Rosa Bay Bridge Authority may see restructuring negotiations get under way now that a governing board is in place.
Santa Rosa County commissioners Thursday made three appointments to the bridge authority panel contingent upon the purchase of liability insurance by the trustee for the defaulted debt, Bank of New York Mellon.
The SRBBA board hasn’t met since last December because all but two of seven members resigned during a Securities and Exchange Commission investigation that appears to concern disclosure issues. A payment default occurred July 1 when reserves were depleted. The authority has $115.9 million of outstanding bonds.
The SRBBA now has six of seven members on board. Four are required to meet and take action. The Florida governor’s office agreed recently to retain two former board members, and still has one appointment to make. The northwest Florida transportation district secretary also is a voting member of the board.
Because toll revenues have fallen short of debt-service payment requirements for years, the bridge authority had no money to do audits or pay for a director, an attorney, or board members’ liability insurance.
BNY Mellon said in a Sept. 21 market notice that it agreed to pay for a board attorney and clerical support, and that quotes were being obtained for the insurance.
Insurance was a critical element for new board members to serve, especially with the SEC inquiry pending.
Morgan Lamb, a governor’s appointee who remained on the board, said he did not know about the status of the liability insurance.
“I informed the lawyer who was handling it that liability [insurance] in itself was not adequate,” he said Thursday. “We need assurance that an attorney will accompany us in case something like the SEC requests our presence.”
Lamb never received a letter from the agency, but other former board members did. They appeared before the SEC without counsel or hired their own personal attorneys.
Since the new board appointments are contingent upon the liability coverage being in place, it does not appear that next week’s scheduled meeting will occur, according to Lamb. “As soon as all of the pieces are in place, I will schedule the meeting,” he said.
In interviews earlier this week, two of the county’s appointees said that the assistance of a bond attorney likely would be necessary to begin restructuring negotiations with bondholders.
Roy Andrews reportedly has been asked by BNY Mellon to resume work for the board as its attorney. Andrews served as general counsel, not as bond attorney, to the SRBBA. For many years he worked for free since the board had no funds to pay him.
The authority’s now junk-rated bonds were sold in 1996 to build the 3.5-mile-long Garcon Point Bridge, though toll revenues never brought enough revenue to make full debt-service payments without dipping into reserves.
