Bessemer Courthouse Settlement

September 26th, 2012

Yesterday, the Commission approved a term sheet with Ambac Assurance Corporation (Ambac), the insurer on the Bessemer Courthouse warrants.  This agreement is a dramatic win for the County and represents the Commission’s first negotiated settlement with a significant bankruptcy creditor.  Key provisions of the term sheet include the following:

  • The County stays in the Courthouse.
  • The County’s existing Courthouse lease is rejected (terminated) and will be replaced with a new lease agreement consistent with the terms outlined below.
  • The annual lease payments will be reduced by $3+ million.
  • The County is reimbursed $480,500 in prior construction costs.
  • At the end of the new lease term, the County can purchase the courthouse complex for $1,000.
  • The County has the right to pre-pay the new lease without any pre-payment penalties.
  • The new lease eliminates the $31+ million in balloon payments included in the former lease.
  • Ambac is required to make up the $25 million gap between the County’s lease payments and what is owed annually to the bondholders.
  • The new lease expires in 2037 (instead of 2026) to smooth the annual payments, eliminate the balloon payments and reimburse Ambac for the negotiated $25 million in gap   payments.
  • The new lease is subject to final documentation and bankruptcy court approval, neither of which should be a problem.

Special thanks to our bankruptcy attorneys, who definitely deserve a “shout out” for their work on this agreement.