On Air Now

Current Show

The Huge Show   3:00 PM - 5:00 PM

We're talkin' sports on The Huge Show

Show Info »

Upcoming Shows

Program Schedule »

Listen

Listen Live Now » 1450 AM Holland, MI

Weather

Current Conditions(Holland,MI 49422)

More Weather »
56° Feels Like: 56°
Wind: SE 6 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Partly Cloudy 46°

Tomorrow

Partly Cloudy 69°

Wed Night

Mostly Clear 53°

Alerts

Detroit says Barclays agrees to $275 million financing

(Reuters) - Barclays Capital Inc has agreed to raise up to $275 million to fund Detroit's exit from municipal bankruptcy, the city announced on Thursday.

The funding will involve financial recovery bonds issued through the Michigan Finance Authority then purchased by Barclays at a price equal to par, according to deal's term sheet. Barclays will be the exclusive underwriter and syndication agent for the so-called exit facility.

The bonds, which include up to $200 million of tax-exempt debt, will be secured by a lien on Detroit's income tax revenue. They will initially be issued as variable-rate debt tied to the SIFMA Municipal Swap Index plus 4.25 percent for tax-exempt bonds, and one-month USD-LIBOR plus 4.75 percent for taxable bonds. They will subsequently be re-marketed as fixed-rate debt.

Proceeds will be used to retire a $120 million loan from Barclays, as well as fund post-bankruptcy improvements and pay certain creditor claims. These will include a $45 million settlement over soured interest rate swaps related to $1.4 billion of Detroit pension debt, the term sheet indicated.

“We are very pleased to have secured this exit facility and are encouraged by the reception we received from the broader financial community," Detroit Emergency Manager Kevyn Orr said in a statement. "We look forward to deploying these funds in our ongoing effort to make Detroit a viable and strong American city once again.”

The announcement came as U.S. Bankruptcy Court Judge Steven Rhodes begins a key hearing on Tuesday to determine if the city's plan to adjust $18 billion of debt is feasible and fair.

The city had been seeking a $300 million loan and court-appointed expert witness Martha Kopacz noted in a report last month on the plan's feasibility that the size and terms of the deal were critical.

"To the degree the city is not able to procure the

anticipated exit financing in the amount or at a reasonable interest rate will materially impact the city’s cash flow liquidity at its emergence from bankruptcy," her report said.

Detroit filed the biggest-ever municipal bankruptcy in July 2013.

(Reporting By Karen Pierog; Editing by Diane Craft, Bernard Orr and Andre Grenon)

Comments