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.