Reuters: Bankruptcy News: UPDATE 1-Bankrupt Alabama county has deal on $105 mln of bonds

Reuters: Bankruptcy News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-Bankrupt Alabama county has deal on $105 mln of bonds May 14th 2013, 19:29 Tue May 14, 2013 3:29pm EDT * Deal covers county general obligation bonds * Agreement comes ahead of promised county workout plan * County says bonds will shift to fixed-rate from variable By Melinda Dickinson BIRMINGHAM, Ala., May 14 (Reuters) - As Alabama's Jefferson County readies a workout proposal for its landmark $4.2 billion bankruptcy, officials on Tuesday announced an agreement with creditors JPMorgan Chase and Bayerische Landesbank covering $105 million of defaulted debt. The deal, one of a series the county has reached since filing the biggest U.S. municipal bankruptcy in late 2011, covers the county's 2001b general obligation warrants and was expected to be approved on Thursday by the Jefferson County Commission. The Jefferson County case is seen as a testing ground for how bondholders fare when a local issuer breaks under excessive financial pressure. The bankruptcy is the result of debts taken on in a costly overhaul of the county's sewer system. The agreement announced on Tuesday saves the county $2 million in fees and interest payments and shifts its variable rate payments on the bonds issued for infrastructure projects to a 4.9 percent fixed interest rate, officials said. The deal will end the debt's default status and also waives claims by the creditor banks of $10 million of other interest since the bankruptcy, according to a briefing note from the county. Jefferson County, which last week told a bankruptcy judge it aimed to file a proposed plan to adjust its debts by late June, hopes the deal encourages holders of the county's $3.2 billion of sewer debt and other creditors to compromise, officials said. "We are cautiously optimistic as we work toward a cram down," Commissioner Joe Knight said on Tuesday. "It would be better to reach a consensual agreement, for it not to be adversarial. But we need to be prepared for whatever comes." Jefferson County already has in place deals with creditors Ambac Assurance Corp and Depfa Bank Plc on some claims and has slashed spending by laying off workers, closing some operations and reducing services since 2011. The chief bankruptcy lawyer for Jefferson County, whose finances were wrecked by soured sewer debt and a court order killing a local tax, last week reported "substantial progress" toward a consensual agreement with Wall Street banks, hedge funds, insurers and creditors. But holders of sewer debt, including JPMorgan, have shown little willingness to give ground and may be faced with non-negotiated terms that can be approved without their agreement, according to county officials. Tuesday's $105 million agreement includes terms that allows JPMorgan to exit the GO warrants agreement, according to one of the bankruptcy lawyers for the county. "If JPMorgan and the county do not reach a satisfactory agreement over the sewer debt, JPMorgan has the right to withdraw from the agreement," attorney Lee Bognanoff said. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions