CHICAGO – Holders of $113 million of defaulted bonds issued for a Branson, Missouri Airport will get an update on airport operations and an amended forbearance agreement on Oct. 13.
"There will be a public call for bondholders and market participants attended by management of the company" to "discuss current business at the airport" and an amended forbearance agreement that runs through Jan. 31, 2017, says a notice published by bond trustee UMB Bank on the Municipal Securities Rulemaking Board's EMMA website.
The agreement prevents bondholders from taking action which could include foreclosure proceedings against the obligated group unless termination events are triggered.
"At the direction of holders of a majority in principal amount of the bonds outstanding, the bond trustee has become party to an amended and restated form of the forbearance agreement to extend the forbearance through January 31, 2017 absent the occurrence of a termination event," the notice reads. The previous agreement expired.
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 airline service and passenger projections.
The airport continues to struggle with negative monthly cash flow of $100,000 to $200,000 that hits a high of nearly $900,000 in January as passenger levels taper off over the winter, according to the new notices.
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. Extensions and amendments have further staved off any bondholder action as long as the operators hit specified service and funding targets.
Defaults of the agreement can be triggered if passenger levels or operating expenses veer too steeply from budgeted projections or the company fails to collect in any two-month period at least fifty 50% of projected revenues. Any bankruptcy proceedings of the company or a guarantor would trigger an immediate termination.
The bonds are secured by airport revenues and funds with a market value of $4 million as of September 1, according to trustee notices. The trustee earlier this made a distribution of $5 million to holders.
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.
The trustee's counsel is Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC.