LOS ANGELES -- Bank of America, trustee for a 1982 industrial development revenue bond issue for the Days Inn Hotel Project in Oakland, Calif., yesterday issued a notice of default after a June interest payment was missed.
On Jan. 15, Bank of America notified investors that certain events of default had occurred in connection with the $ 5.2 million bond issue.
Following that notice, however, "the default in payment of the December 1992 principal and interest on the bonds ... was cured, by payment of all past due amounts of principal and interest, including interest
on such past due amounts as required by the indenture," yesterday's notice says.
The trustee said, however, that new events of default have occurred and are continuing, including a missed loan payment due May 25, under an agreement between Days Inn of America inc. and Oakland. Loan payments from the project owner provide underlying security for the bond issue.
The missed loan payment led to a default in the bond interest payment on June 1, according to the trustee's notice. In addition, the owners of the Days Inn project failed to pay certain fees and expenses of the trustee and did not furnish the trustee with audited financial reports, Bank of America said.
The June 1 interest due on the bonds was $241,389, according to the notice.
After defaulting on the June bond interest payment, "the project owners have made partial loan payments of $170,000," the notice says, adding that "the trustee continues to seek payment of the remaining overdue amounts."
In addition, "the trustee has been informed that the project owners are seeking to refinance the project loan and redeem all the bonds outstanding." the notice says. "The trustee can give no assurances that the project owners will be successful in this refinancing effort."
About $3.95 million of the original bond issue remains outstanding, a Bank of America official said yesterday.
The notice said that Bank of America does not have the identities of most bondholders because much of the debt is held in bearer form. Bondholders who have not contacted the trustee previously were urged to provide their names and addresses so Bank of America can provide them with communications about the bonds.
The CUSIP number on the Series 1982 bonds is 672278, according to the trustee.
Bank of America also called bondholders' attention to indenture provisions that allow investors to "direct the trustee to exercise various rights and remedies with respect to events of default, including the right of holders of 25% in aggregate principal amount of bonds outstanding to direct the trustee to accelerate the bonds."
The bank said it has not received such directions and therefore "has not accelerated the bond or loan payments under the project agreement."