CHICAGO — The trustee on $113 million of bonds that financed construction of the privately owned Branson, Mo., Airport opted not to nearly drain remaining reserves to make a Jan. 1 debt-service payment as airport operators struggle to bolster operations and stave off future bondholder enforcement actions.

The skipped payment marks the first time bondholders have not been paid. The trustee, UMB Bank NA, has drawn from reserves to cover past shortfalls in revenues pledged to repayment of the unrated tax-exempt bonds that were issued in 2007 by the Branson Regional Airport Transportation Development District. Proceeds funded the airport that was developed and owned by Branson Airport LLC.

UMB reported the decision not to make the $3.4 million payment from $3.5 million of remaining reserves in a bondholder notice posted late last month. The decision was made after consulting majority holders and was driven by “the continuing default status of the bonds, the terms of the indenture and bond documents … the company’s publicly reported ongoing financial losses,” and the existence of a forbearance agreement, the notice said.

The trustee has not determined whether it will make the semiannual interest payment scheduled for July. A UMB Bank official declined any further comment.

Bondholders also approved amendments to the forbearance struck last April that provided the airport with some breathing room after its inability to fully cover the Jan. 1, 2011 payment triggered an event of default. The amendments include changes to various benchmarks and projections.

The airport owes semiannual interest payments of $3.4 million until July 2013, when principal repayment begins. In anticipation of the forbearance pact, the bank agreed to advance $500,000 from supplemental reserves to the airport for operations in the form of a secured note backed by a property pledge.

Under the forbearance agreement, the trustee agrees until at least the end of June not to take any enforcement measures allowed by the bond indenture in the event of a default. In such an event, the indenture allows bondholders to 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 an ongoing state of default, they also could eventually move to foreclose on the property, according to the offering statement.

The bonds are secured by a pledge of the trust estate that includes rental payments owed under the operating lease. Branson Airport LLC owned the land but deeded it to Taney County, which then leased the airport to the development district.

The forbearance staves off any action until June 30. If the airport meets various terms involving activity levels, revenues and operating expenses, the expiration is extended by one year. The company remains in compliance with the agreement’s terms.

Private developers put together a public and private financing package in 2007 to pay for construction of the facility, which opened in May 2009 to further build tourism in Branson, the self-proclaimed live music capital of the country that draws more than seven million tourists annually. The airport has continually added service, bolstering its prospects, but passenger counts still remain behind original estimates as the tourism and airline industries lag.

The trustee’s December notice also reported that the city of Branson made its most recent payment of $196,000 under a revised pay-for-performance agreement. The airport relies on a semiannual subsidy from the city based on the number of passengers under the pact. The city initially withheld a 2009 payment but later made one under the revised agreement. It also made its 2010 payments.

The last trading activity on the bonds occurred in summer when the bonds traded at 42 cents on the dollar, according to Interactive Data Pricing and Reference Data Inc.

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