CHICAGO -- A group of institutional investors that own much of the $322 million of outstanding St. Paul Port Authority Common Revenue 876 bonds has requested that a petition to implement the authority's restructuring plan be withdrawn.
Michael Strand, vice president of communications at the authority, said the bondholders last week requested the authority-appointed trustee for the bondholders. First Trust National Association in St. Paul, to withdraw the petition. That petition was filed in Ramsey County, Minn., District Court in October.
A hearing on the motion to withdraw the petition is anticipated later this month, he said.
In October, the authority announced a restructuring plan that included bondholder concessions to avoid an anticipated default of outstanding bonds.
In a news release, the authority said yesterday that "while some bondholders have been supportive of the restructuring proposal, others have raised concerns about the nature of the proceeding and have asked for the opportunity to discuss the restructuring further with the authority."
A court hearing on the restructuring, which had been scheduled for Nov. 23 and 24, has been postponed to Jan. 25, according to the release.
The petition for implementation of the restructuring was filed in the Ramsey district court in accordance with a state law that facilitates the restructuring of private and corporate trusts, according to Strand.
This procedure was chosen instead of a voluntary restructuring because of the authority's failed attempts to clearly identify and contact all holders of the Resolution 876 bonds. In addition, the diverse composition of investors made it impossible to achieve unanimity on a specific restructuring plan, Strand has said.
The restructuring would affect holders of $258 million of bonds that mature after Dec. 31, 1999. About $63.9 million of bonds that mature before 2000 would not be affected.
Bondholders affected by the restructuring would be able to choose from one of three options: a 45% reduction of interest on the bonds, a 25% reduction in principal, or a combined principal reduction of 15.5% and interest rate reduction of 20%.
The restructuring would not affect other authority projects or funds.
According to the release, the authority "concurs" with the bondholders' decision to withdraw the petition to implement the restructuring plan.
"The Port Authority believes, however, that further discussion between the authority and its bondholders can best continue outside of the court proceeding," the release says.
The authority "continues to believe that a restructuring of the 876 program is desirable and in the best interests of bondholders. Because of that belief, the authority has sought the participation of its 876 bondholders for much of the past year, and continues to welcome that participation," the release says.