Burlington, Vt.'s settlement with Citibank in its dispute over Burlington Telecom is a credit positive for the city, Moody's Investors Service said.
While Burlington's mayor reached the agreement with Citibank in early February, the Burlington City Council approved the settlement on Feb. 18.
Citibank had been seeking more than $40 million and de-installation of Burlington Telecom's high-speed internet and telephone network. The agreement is expected to give Citibank $10.5 million plus a share of future Burlington Telecom revenues.
"The city intends for the payment to be made from telecom revenues and not to be supported by taxpayers through the city's general fund," Moody's analyst Nicholas Lehman said. Moody's rates the city's senior debt Baa3 with a negative outlook.
Burlington is seeking a bridge loan to cover the bulk of the settlement. The city will sell BT to pay off the loan.
Burlington Mayor Miro Weinberger told The Bond Buyer that he was optimistic about enacting the settlement over the next six months.
Weinberger said he expected the city to sell a bond in the late summer.
Burlington must file by March 15 a petition seeking Vermont Public Service Board settlement approval. "We expect the PSB approval to focus on Burlington's ability to finalize the financing sources primarily from BT revenues and not from other city funds," Lehman said.
Burlington has about $106 million in outstanding debt.
