CHICAGO — Struggling to repay $113 million of debt that financed its privately owned and operated airport in Missouri’s Ozark Mountains, Branson Airport LLC has won a reprieve against enforcement actions from bondholders who agreed to extend a forbearance agreement.

The original forbearance, in which bondholders agreed not to take enforcement against the airport, which last year defaulted on its bond terms, expired June 30. Bondholders agreed to an amended one to give the airport more time to succeed in light of new service coming to it next year, according to a notice posted Monday by the bond trustee, UMB Bank NA.

The notice also reported that the trustee decided not to drain remaining reserves of $3.4 million to make the $3.4 million July 1 debt service payment. The trustee had also opted not to make a payment due last January. To cover previous payments on the unrated, tax-exempt issue, the trustee drew from reserves.

The bonds were sold in 2007 by the Branson Regional Airport Transportation Development District. Proceeds funded the airport that was developed and owned by Branson Airport LLC. The airport long ago fell short of meeting initial service and passenger projections.

The airport and bondholders struck the original agreement in April 2011 after the airport’s failure to make a Jan. 1, 2011, payment triggered a default event. Bondholders agreed to amendments changing certain fiscal and performance benchmarks and projections in April 2011.

The airport owes semiannual interest payments of $3.4 million until July 2013, when principal repayment begins. The trustee last year 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.

The airport this spring asked bondholders for still more time. After reviewing the airport’s proposed budget, passenger projections and pledge to raise outside funds to cover operations if needed, a committee representing holders of 83% of the principal amount of bonds agreed to an amended forbearance through June 30, 2013.

The agreement remains in place “absent the occurrence of a termination event, and provides for potential extensions through Dec. 31, 2013,” the notice reads.

“In support of its proposal, the company asserted that the publicly reported announcement of future Southwest Airlines-branded service to the airport and new multi-year agreement between Southwest Airlines and the company, together with other trends at the airport, reflect opportunities for the company to prospectively increase revenues and enplanements,” the bondholder notice read.

Under terms of the new agreement, the company must continue to seek equity funding or issue subordinated debt to cover operating shortfalls, repay with interest a $2 million advance from the trustee in installments through next year, meet certain benchmarks and provide monthly financial updates.

Termination events include a failure to meet certain financial measures. If cash flows meet a specified threshold, the forbearance could be extended to September 30, 2013. A similar test and a deposit of $1 million in reserve funds is needed to extend the agreement to the end of 2013.

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, 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. Private developers put together the financing package in 2007 to pay for construction of the facility, which opened in May 2009 to further build tourism in the city of Branson, the self-proclaimed live music capital of the country.

The airport has continued to add service, bolstering its prospects, but passenger counts still don’t meet original estimates as the tourism and airline industries lag.

The trustee’s notice also reported that the city made its most recent payment of $362,000 at the end of June under its pay-for-performance agreement. The airport relies on a semiannual subsidy from the city based on the number of passengers under the pact. Branson initially withheld a 2009 payment.

The airport announced earlier this month that Southwest Airlines would begin service in 2013. Airport executive director Jeff Bourk said, “Southwest Airlines’ presence in this region will do enormous things for the economic development of the entire Southwest Missouri and Northwest Arkansas area.” The airport currently has eight nonstop destinations, including Atlanta, Baltimore and Washington, Chicago, Houston and Orlando on AirTran Airways, which is now part of Southwest, Denver on Frontier Airlines, and Austin and Nashville on Branson AirExpress.

The bonds’ most recent trading activity showed a drop to 25 to 27 cents on the dollar from 45 cents last year.

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