WASHINGTON — Senior bondholders of a South Carolina toll road’s debt are claiming they are owed at least $237.8 million as they continue to wrestle with state transportation officials over a debt restructuring plan.
Last week, U.S. Bank NA, the trustee for the senior bondholders, disclosed in a material event notice that it has filed a claim for at least $237.8 million of principal plus the accreted value of capital appreciation bonds and the accrued value of current-interest bonds.
The bonds were issued in 1998 by the Connector 2000 Association Inc. for a 16-mile toll road around Greenville, S.C. The figure cited by U.S. Bank represents the outstanding value of the bonds up to June 24, when the association filed for bankruptcy.
At the same time, the South Carolina Department of Transportation is challenging the association’s request to file for Chapter 9 bankruptcy. SCDOT has claimed the Connector does not meet the requirements of a municipality and therefore cannot claim Chapter 9 status. Officials are concerned the state will end up with the responsibility for the money-losing toll road.
The case has been assigned to U.S. bankruptcy Judge David Duncan and is scheduled to go to trial on Dec. 6.
U.S. Bank said efforts between bondholders and SCDOT to reach a restructuring plan for the Connector’s debt have stalled. “It is too early to predict the outcome of the bankruptcy proceedings or the ultimate treatment of the bonds,” U.S. Bank wrote.
The bank said subordinate bondholders should contact their trustee, HSBC Bank US NA, to coordinate the filing of a claim.
An attorney representing HSBC confirmed on Friday that the bank has filed a claim on behalf of holders of the subordinate bonds.
The Connector defaulted on the bonds in January after the toll road failed to attract the projected amount of traffic and did not generate enough revenue to pay off the bonds. The toll road continues to operate, but will need about $61 million for repairs and maintenance over the next 41 years, according to SCDOT estimates.
Under the current flow of funds from the Connector’s toll revenue, the department is in a subordinate position to the bondholders and may never recoup the roughly $8.3 million it has paid for maintenance or future payments.
Bondholders are currently funding operational costs, including toll collections. Earlier this year, bondholders offered to reduce their claims by about $120 million and provide SCDOT with funds for maintenance costs, but the state rejected the offer in June.