CHICAGO - Syncora Guarantee Inc. is pushing back against widely reported claims that it is receiving 26 cents on the dollar in its tentative settlement with Detroit, saying the actual recovery is "much lower than reported."
The bond insurer reached the agreement in principle with the city Tuesday, and is in the midst of high-stakes mediation Thursday and Friday to hammer out final details of the deal.
When the settlement was first announced, many media outlets reported the insurer's recovery would total 26 cents on the dollar. That's up from the 6 to 10 cents on the dollar the city originally offered.
But because the settlement features a mix of cash, real estate, and asset leases, it's difficult to calculate a final figure, Syncora's Kirkland & Ellis attorneys said in a statement.
The insurer will recover 13 cents on the dollar of its $400 million of certificates of participation, or COPs, claim. But the exact value of a 20-year lease extension on the operation of the Detroit-Windsor Tunnel, and a 30-year lease of a downtown parking garage, is uncertain, Syncora said.
"The global deal between Syncora and the city cannot be accurately quantified in terms of cents on the dollar," the firm's statement said. "Specifically, the deal contains three distinct parts: settlement of class 9 COPs claims, a development agreement with the city tied to the existing tunnel lease, and settlement of swaps-related and other litigation. The value attributable to the settlement of class 9 COPs claims alone is 13 cents on the dollar. The swap settlement is separate, distinct, and on account of Syncora's unique claims against the City. The value related to the development agreement depends on many long-term factors such as real estate prices, economic growth and financing costs that will vary over time. This makes the range of recovery by Syncora very speculative, but it is almost certainly much lower than reported."
