WASHINGTON — The Connector 2000 Association Inc., the troubled South Carolina toll road that went into default on Jan. 1, filed for bankruptcy on Thursday.
As part of its Chapter 9 bankruptcy filing, the association is seeking to restructure its debt. The association owes about $369 million to the two trustee banks, U.S. Bank NA, the trustee for holders of senior debt, and HSBC Bank USA NA, the trustee for holders of the subordinate debt, according to court documents.
The claims of the senior bondholders are believed to be partially secured and unsecured, the documents said. The secured portion of the senior claims is estimated to be $150 million. None of the subordinate bondholders’ claims are secured.
Additionally, ACA Financial Guaranty Corp. is listed as a creditor and an insurer of a portion of the outstanding bonds. A dollar amount for the portion owed to ACA for insurance is not specified in court documents.
ACA’s website shows about $20 million of Connector debt is in its outstanding secondary market insured portfolio.
The association said it has not identified all the bondholders. In November 2008, the Connector found that at least 330 different accounts held senior debt and 84 different accounts held subordinate debt.
The Connector “is engaged in active discussions with the representative of the bondholders and the South Carolina Department of Transportation in an effort to reach a consensual plan to adjust the debts of the association,” an association spokesperson said Thursday in a statement.
John Van Duys, an attorney with Haynsworth Sinkler Boyd PA, the association’s bond counsel, said a material event notice will likely be filed in the coming days along with the Connector’s audited financial statements.
South Carolina lawmakers in February voted against legislation that would have paved the way for restructuring more than $200 million of the toll road bonds. Some lawmakers said they were concerned the state would ultimately take responsibility for the road’s debt if the legislation passed.
The Connector is a 16-mile toll road in Greenville. It issued bonds in February 1998 and the toll road opened eight months early in March 2001. But toll revenue never came close to the initial traffic estimates made by Wilbur Smith Associates, a Columbia-based transportation and infrastructure consulting firm. The Connector 2000 Association collected $5.25 million in 2009, or one-third of the revenue the firm estimated the toll road would generate for 2009 under the original traffic estimates.
In January, Standard & Poor’s downgraded the bonds to D. The association had $64.4 million of outstanding Series 1998A senior current-interest toll road revenue bonds and $165.4 million of Series 1998B senior capital-appreciation toll road revenue bonds at the time of the downgrade, according to Standard & Poor’s.
The agency did not rate $90.9 million of Series 1998C subordinate capital-appreciation bonds that have also defaulted.