CHICAGO - Investors holding $113 million of bonds issued for the privately owned and operated Branson Airport in Missouri have agreed to an amended forbearance agreement that gives the struggling Ozarks air field more time to pick up operations.

Branson Airport LLC's previous forbearance agreement had expired June 30. An amended forbearance will remain in place through June 30, 2015 although violations of terms would allow bondholders to terminate it.

The airport previously defaulted on the tax-exempt bonds sold in 2007 and then also on terms of a past forbearance that could have resulted in bondholder enforcement actions.

The airport has struggled to build passenger traffic and after some positive momentum hit a setback when Southwest Airlines in December announced it would cease operations to Branson in June.

Trustee UMB Bank NA sought bondholder input to decide "what action may be appropriate" in light of the announcement and hired aviation consulting firm ICF-SH&E for advice and Ricondo & Associates.

UMB reported in a recent notice that it evaluated "potential terms for an extension of the forbearance agreement to support the continued operation of the airport and the company's efforts to enhance air service to the airport." UMB consulted with a group of bondholders who hold a majority of principal and they directed the trustee to sign a revised forbearance.

The airport defaulted on bond terms in 2011 but won a reprieve in its first forbearance that year. The trustee stopped making payments in 2012 after dipping deeply into reserves to cover previous payments.

Bondholders then agreed to an extension and amended forbearance with a June 30, 2014 expiration. The agreements have staved off any enforcement action as long as the operators hit specified service and funding targets.

Under the bond indenture, bondholders can demand immediate repayment of all principal and interest, terminate the airport's operating lease and pursue legal action to capture revenue in the event of a default. In the event of an ongoing state of default, they also could eventually move to foreclose on the property.

Under the amended forbearance agreement, the company shall continue negotiations with the trustee regarding the company's obligations with respect to the bonds and compliance with the bond documents and the parties shall monitor financial performance and ongoing efforts to enhance service.

The agreement also lays out the company's latest budget, requires the company to continue providing monthly financial reports, and acknowledge its obligations. Bondholders can terminate the agreement if the airline fails to meet benchmarks that measure performance against the budget and require the company to perform under air services agreements with carriers.

The forbearance specifies that it does not modify the bonds documents and the company waives the right to a jury trial in any action or lawsuit "or proceeding to enforce or defend any rights under" the revised agreement.

The trustee's counsel is Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC.

The tax-exempt, unrated bonds were sold in 2007 by the Branson Regional Airport Transportation Development District on behalf of private developers. Proceeds funded construction of the airport, which was supposed to boost and benefit from Branson tourism.

The airport opened in 2009 but it has fallen short of meeting initial service and passenger projections.

The airport hit its 2014 peak in passengers with more than 14,000 in May, but it fell to 6,700 in June and in July, without Southwest, was at about 5,300. It's projecting 73,600 passengers in total this year and 94,000 passengers next year based on existing scheduled service, far below the original estimates needed to cover debt repayment.

The company is hoping to bolster service through a partnership struck earlier this year with Corporate Flight Management Inc. which is providing service under the name Buzz Airways from Chicago and Houston. The airport also continues to offer service from Frontier Airlines and Branson Air Express.

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