Detroit, swap banks reach bankruptcy deal

Published On: Dec 24 2013 01:31:45 PM EST
Updated On: Dec 25 2013 04:53:58 AM EST
Detroit bankrupt
DETROIT -

Bankrupt Detroit has reached a new deal with two banks to settle millions of dollars in debt tied to an interest rate swap deal.

Emergency manager Kevyn Orr says an agreement was reached Tuesday to terminate the swaps deal for $165 million with UBS and Bank of America. Before the new deal, Orr had said the payoff amount was $220 million.

It still has to be approved by bankruptcy Judge Steven Rhodes, who ordered the city to seek a better deal with the banks as part of restructuring and turnaround efforts.

Detroit pledged casino tax revenue in 2009 as collateral to avoid defaulting on past pension debt payments. The swaps allowed Detroit to get fixed interest rates on pension bonds with UBS and Bank of America.

Orr also says the city also has agreed to lower a financing loan to pay off the banks.

The termination agreement and the revised post-petition financing loan must be approved by Rhodes at a hearing scheduled for Jan. 3, 2014.

“This is an important development for the City and its residents because it means we can start moving forward on implementing needed investments in public safety and services,” said Orr in a news release. “This agreement represents a significant reduction from the original deal struck with the banks. The banks and the City, through mediation, and with the mediator’s recommendation, have accepted the reduction in terms.”

SPECIAL SECTION: Detroit bankruptcy

Download: Detroit Bankruptcy filing December 2013

Previous story:Rod Meloni: Strange turn of events postpones bankruptcy hearing

Comments

The views expressed below are not those of Click On Detroit, WDIV, or its affiliated companies. By clicking on "Post," you acknowledge that you have read the Terms of Service and your comment is in compliance with such terms. Readers, please help keep this discussion respectful and on topic by flagging comments that are offensive or inappropriate (hover over the commenter's name and you'll see the flag option appear on right side of that line). And remember, respect goes both ways: Tolerance of others' opinions is important in a free discourse. If you're easily offended by strong opinions, you might skip reading comments entirely.

blog comments powered by Disqus