SAN FRANCISCO Oregon Coast Aquarium officials are breathing a sigh of relief, after gaining the consent from 100% of bondholders for a tender offer to restructure the aquariums defaulted debt.
We ended up with every single bond tendered and exchanged, said Al Gleason, a vice chairman on the aquarium board. Obviously were extremely happy because it allows us to restructure our bond debt.The aquarium began defaulting in 2002 on a $14.1 million 1998 revenue bond issue sold through the Oregon Health, Housing, Educational and Cultural Facilities Authority.
About $12.97 million is outstanding, and bondholders agreed to tender their defaulted bonds for replacement bonds with maturities 12 to 15 years later than the original bonds. They will get about half their past-due interest and a coupon on the new bonds 10 basis points higher than the originals, ranging from 4.3% for 2014 maturities to 5.6% for 2026 term bonds.
The new issue is unrated; the original uninsured bonds carried a BBB-minus rating from Standard & Poors at their 1998 issuance.
Bond tender documents supplied by the aquarium indicated that the only viable option, if the tender had failed, would have been seeking Chapter 11 bankruptcy protection.
Since the default, the aquarium bonds have been thinly traded, and then at 12 or 13 cents on the dollar, according to trade data supplied by the Municipal Securities Rulemaking Board.
The new bonds will have the same conduit issuer as the 1998 bonds, though it has since been renamed the Oregon Facilities Authority.
We would expect to close that tender before the end of June, Gleason said.
The aquarium in Newport fell into trouble after two glory years when hordes of visitors came to view Keiko, the orca star of the movie Free Willy, who spent two years at the facility preparing for his release in the wild. After leaving Oregon in 1998, the whale moved on to the waters around Iceland and Norway before dying in a Norwegian fjord in 2003.
The bonds were issued largely to finance replacement exhibits to encourage patrons to return after Keikos departure. Attendance dropped anyway, and the exhibits were plagued with cost overruns magnified when the aquariums former president took on $2 million in bank loan debt without the boards approval actions that eventually lead her to plead guilty to forgery charges.
With visitor numbers stable and the operating budget in balance, the successful bond tender puts the aquarium almost all the way back to solvency, Gleason said.
The final step is to meet the terms of a donors $1 million challenge grant. It was conditioned on a successful bond tender, and raising $1 million in matching donations, Gleason said, adding that the aquarium is two-thirds of the way to that goal.
We need to get that challenge complete, he said. We believe since we have all year to do it, its doable.
