WASHINGTON — A federal bankruptcy judge has approved the restructuring and reorganization of the debt of the Connector 2000 Association, a beleaguered toll road operator in Greenville, S.C.

Judge David R. Duncan, whose court is in Spartanburg, S.C., approved the plan Friday, under which bondholders’ current debt — which contains current interest as well as zero-coupon bonds and was issued in 1998 — will be exchanged for new zero-coupon bonds as soon as next month.

The plan was hammered out between South Carolina and bondholders in November.

The Connector defaulted on its debt on Jan. 1, 2010, and filed for Chapter 9 bankruptcy in June after toll revenues were much lower than projected.

The South Carolina Department of Transportation “was pleased that the judge confirmed” the restructuring plan, said Linda McDonald, an attorney with SCDOT, which maintains the toll road.

“The management of the Connector looks forward to a fresh start after its reorganization,” the issuer said in a statement.

Duncan’s order is expected to be filed by mid-week, beginning a 14-day period during which it can be appealed.

Two sources familiar with the plan said they did not think it would be appealed.

However, one bondholder filed an objection to the plan earlier this month. Thomas Stoeckmann of Menomonee Falls, Wis., filed his objection as a retail investor holding about $1.6 million of senior and subordinate debt, according to a two-page letter he sent to Duncan. Stoeckmann is a fund manager for the Wells Fargo Advantage Wisconsin Tax-Free Fund, but the fund did not appear to hold any of the Connector bonds as of Jan. 31.

Stoeckmann said the restructuring gave too much authority to SCDOT. His objection was taken into consideration by Duncan at the hearing Friday but he was not present, the sources said.

Stoeckmann could not be reached for comment on Monday.

A spokesperson for Wells Fargo Fund Management LLC declined to comment.

If there is no appeal of the judge’s approval of the plan, the debt exchange could occur by the end of April, sources said.

Under the restructuring, each holder of the Connector’s 1998 bonds will get a share of the new bonds depending on what bonds they currently hold.

The new debt will be zero-coupon bonds and will have a par amount of about $150 million. However, the bonds will have an accreted value of $598 million at their maturity dates, the latest of which will be July 20, 2051.

Zero-coupon bonds are original-issue discount bonds for which no periodic interest payments are made. They are issued at a deep discount from par, accreting at the rate represented by the offering yield at issuance, to their full value at maturity.

Roughly $134 million of the $200.2 million bonds the Connector issued in 1998 were zero-coupon bonds. Of the $200.2 million of bonds, $66.2 million were Series A current interest bonds, $87.39 million were Series B senior zero-coupon bonds and the remaining $46.59 million of Series C bonds were subordinate zero-coupon bonds.

The accreted value of the outstanding debt is $320 million.

No bond documents or ratings are needed for the bond exchange, sources said. The Series 2011A senior bonds will have 11 maturities and three term maturities through July 2051.

The Series B senior subordinated bonds will have three maturities through July 2051. Bondholders with subordinate debt will receive Series C junior-subordinated capital appreciation bonds that mature in July 2051.

SCDOT will take over maintenance of the road during the life of the 40 license agreement. As part of the deal, the department’s subordinate position in the flow of revenues has been elevated so that the state will get some toll revenue funds ahead of bondholders.

Based on a 2009 traffic study by Stantec Consulting Services Inc., SCDOT said it expects to receive $84 million over the life of the license. That’s still short of the $183 million the agency expects maintenance will cost over the 40-year period.

 McDonald said Stantec’s cost and revenue estimates are based on past maintenance costs for comparable roads in Greenville County. The figures could fluctuate if gas prices jump and if more trucks use the road, among other variables, she said.

The Connector’s 2010 toll revenues fell $486,890 short of Stantec’s estimate of $5.8 million for the year. Stantec estimates the toll road will generate $6.17 million of revenue this year.

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