The Texas Turnpike Authority has again delayed seeking state approval for a proposed $210 million refunding to avert a default on the Houston Ship Channel Bridge project, citing lingering questions over the deal by state officials.
Turnpike officials this week had asked the Texas Bond Review Board to refrain from voting on the matter at its monthly meeting yesterday after Gov. Ann Richard's representative, Paul Williams, told the authority he had unresolved concerns.
"I don't think I was alone here," Mr. Williams said yesterday. "I think we're trying to determine if it's the financing that we want to do, period. It's a fundamental question.
"We have an obligation to look beyond the traditional idea of using more debt to solve the problem," he added.
Tom Pollard, executive director of the review board, said he does not think the authority's latest request to postpone the vote "means we're abandoning the project. We're not considering, in any way, letting the project default."
Turnpike officials have said the $210 million deal would restructure its debt and avert a default on high-coupon junior lien debt in 1996 when revenues are expected to fall short of debt service needs. The plan calls for the use of $90 million in new low-grade debt and $120 million in unrated junior lien bonds.
Bob Peterson, senior vice president at First Southwest Co. in Dallas, the authority's financial adviser, said turnpike officials met privately yesterday with Mr. Williams to answer his questions--as they have for the other four board members--and hope to press forward for final approval soon.
"One of the members said he would feel more comfortable if we didn't call for a vote at this time," he said. "I believe that all the questions have been addressed."
Last month, the turnpike authority asked for a delay in a vote on its issue until the Texas Department of Highways could double-check traffic projections for the troubled bridge at the request of Standard & Poor's Corp. The state later said the projections were reasonable.
Mr. Peterson could not say if the authority might press for a special meeting to approve the refunding before the June 18 meeting of the bond review board.
"The house isn't on fire. We've still got time," he said. "The market is moving our way."
The proposed refunding is the result of 18 months of research by the authority and its advisers, including underwriters Paine Webber Inc. and Lehman Brothers, and they say it is the best solution studied.
The bridge has been troubled since it opened in 1982. Early shortfalls in traffic usage forced the authority in 1985 to sell junior debt to close a revenue gap.
However, in 1990, turnpike officials said new projections showed the junior debt would default in 1996 when the zero coupon bonds with a 12.625% coupon.
That change will cause the annual debt service for the bridge to rise to $21 million a year from $9 million, a level not expected to be covered by revenues.
To avert that default, the authority has proposed the $210 million refunding to solve the problem for a second time. Under the deal, the bond proceeds would be used to retire $88.5 million in Series 1978 senior debt on July 1 and to establish an escrow for the junior bonds through their redemption on July 1, 2002.
Though a vote on the turnpike refunding was stalled again, the bond review board yesterday approved other issues.
The board approved a $135.96 million issue by the Texas Department of Housing and Community Affairs. One series of bonds will be used to redeem $55 million in short-term fixed-rate bonds issued in November. The remainder will use the annual private-activity bond allocation assigned the authority for this year.
The revenue bond deal is expected to be priced the week of June 8 by an underwriting team managed by George K. Baum & Co.; Grigsby, Brandford & Co.; and Southwestern Capital Markets Inc.
The review board also approved a $35 million issue of housing bonds for the Texas Veterans Land Board. The debts are a general obligation of the state, which carries a double-A rating.
The deal is expected to be priced July 22 by an underwriting syndicate including First Boston Corp.; Donaldson, Lufkin and Jenrette; Lehman Brothers; Merrill Lynch & Co.; and Walton, Johnson & Co.
