Missouri's Branson Airport seeks federal grants, bondholder forbearance

Seventeen years after Branson Airport issued bonds to fund the construction of an airport that opened in May 2009, it is again asking for forbearance from bondholders as it seeks federal funds for upgrades.

Bond trustee UMB Bank last month filed notice to bondholders that the airport's leaders want to pursue federal grant funding for major maintenance and infrastructure upgrades. They've identified two specific grant opportunities: the Federal Aviation Administration's Airport Improvement Plan and its Investment Partnership Program. 

The FAA would require Branson to sell 40 acres of undeveloped land to Taney County, Missouri, which already owns 422 of the 922 acres in the transportation district, to qualify for the grants. But Branson needs bondholders' permission to do so, since the land is included in a deed of trust for bondholders.

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According to the notice, "the proposal is supported by holders of more than 66% in principal amount of the bonds." UMB Bank declined to comment.

UMB also updated bondholders on forbearance discussions growing out of prior defaults. The trustee said "the majority holders support a forbearance" and it was presenting Branson Airport with a forbearance agreement including "terms the bond trustee believes will be supported by the majority holders."

The airport secured its first forbearance agreement in 2011 after it defaulted on $113 million of bonds issued in an unrated 2007 deal. In 2016, the airport was trying to extend forbearance.

In January 2018, it sought a global settlement that included an equity ownership offer and new debt to satisfy the existing bonds . A judge approved the equity ownership settlement in April 2018.

The debt restructuring resulting from that settlement allowed Branson to authorize a single class of 1 million equity membership units to replace all prior membership units and warrant rights, according to a December 2018 independent auditors' report. Proceeds of the 2007 bonds, plus equity contributions and airport revenues, were disbursed by UMB in accordance with the indenture.

In May 2018, the airport and bondholders agreed to exchange the $113.795 million outstanding 2007 bonds, and accrued interest of $41.7 million, with $35.5 million of new unrated bondsplus equity in the company.

But the airport "subsequently defaulted on the 2018 bonds," noted Lisa Washburn, chief credit officer and managing director at Municipal Market Analytics, Inc., which tracks defaults such as Branson's. 

According to the event of default notices posted on the Municipal Securities Rulemaking Board's EMMA website in June 2023, the Series 2018A, 2018B and 2018C bonds matured on April 1, 2023, and no payment was made by the airport.

The airport's proposed 2024 budget calls for Branson to incur $250,000 of working capital indebtedness. Meanwhile, airport leadership is apparently looking either to secure grant funding for the vast majority of the planned airport improvements or to privatize the airport.

According to the FAA's website, the Airport Improvement Program covers 90% to 95% of eligible costs for small public-use airports for safety, capacity, security and environmental improvements. The Investment Partnership Program allows public-use airports to pursue privatization to access private capital for airport improvements.

After Branson Airport transfers the 40 acres to Taney County, the county will "have a controlling interest in the [transportation development district]," the FAA said in a statement. The airport would then be "under the control of a public agency," allowing the TDD "to assume and carry out the obligations required of a sponsor in the FAA's Airport Improvement Program project application and grant agreements."

When Branson Airport was in the planning stages, the private developers forecast that debt repayment would flow from an increase in tourism in the area. The public-private partnership between Branson Airport LLC and Taney County has not lived up to the rosy projections despite a jump in tourism revenues in 2021 and continued increases every year since.