Regional News

JeffCo Creditors Agree to Bigger Haircuts

BRADENTON, Fla. – Bankrupt Jefferson County, Ala., announced a deal with major creditors Wednesday to allow a modified plan of finance to be approved in conjunction with the county’s plan to emerge from Chapter 9.

No specifics were released about the agreements but new negotiations opened in recent weeks to seek $350 million in additional haircuts because of rising interest rates and capital needs in the time after the original creditor agreements were negotiated.

County officials announced that the new agreements are with the major sewer system creditors JP Morgan, bond insurers, hedge funds, and liquidity banks, which had already agreed to take a loss of $1.3 billion on $3.2 billion of outstanding sewer debt.

Jefferson County now plans to sell refunding bonds in November as part of its bankruptcy exit plan to deal with $3.2 billion of sewer debt.

Attorney Kenneth Klee told The Bond Buyer Tuesday that he believes the new debt can be issued prior to the county’s exit from Chapter 9.

The county commission will meet Thursday afternoon to approve the modified plan agreements with creditors, according to a joint statement issued by commissioners Jimmie Stephens and David Carrington.

“This effort has involved a lot of people who have worked diligently to solve a very difficult problem,” the statement said. “Without question, more work remains to get the county out of bankruptcy by the end of the year, including confirmation of our plan and the successful placement of the new sewer warrants.

A confirmation hearing on the bankruptcy exit plan is set for Nov. 12.

The county previously planned to issue $1.9 billion of sewer refunding warrants around Dec. 20 as part of the overall plan to exit bankruptcy at that time.

Officials did not explain why the offering was moved to November. They had planned to release the preliminary offering statement for the sale this week. It is not clear if they are still on that schedule.




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