Post by sometimeman on Oct 1, 2008 19:26:09 GMT -4
Alabama County to Vote on Extending Debt Forbearance With Banks
By William Selway
Oct. 1 (Bloomberg) -- Jefferson County, Alabama, will vote tomorrow on extending for a week the agreement with creditors that has allowed it to avoid making full payments on some of the $3.2 billion of bonds that have pushed it toward bankruptcy.
Jefferson County Commission President Bettye Fine Collins said the meeting will be held tomorrow at 10 a.m. If passed, it will keep in place a standstill with JPMorgan Chase & Co., bond insurers and other banks that, upon expiration, would have required the county to make an $83.5 million interest payment that it had no plan to do.
``We don't have the funds to cover these interest payments,'' Collins, a Republican, said in a telephone interview from Birmingham.
The extension will provide the county with another week to try to find a way to refinance bonds whose interest rates soared as high as 10 percent because of the U.S. financial crisis spawned by the subprime mortgage meltdown. The county is among U.S. states and cities in the $2.6 trillion municipal market whose finances have been pinched by debt costs that have risen more than fourfold in some cases, and it has prepared to file for bankruptcy should no agreement be reached.
Should the county seek court protection from creditors, it would be the biggest municipality to go bankrupt since 1994, when Orange County, California, was felled by bad investments.
By William Selway
Oct. 1 (Bloomberg) -- Jefferson County, Alabama, will vote tomorrow on extending for a week the agreement with creditors that has allowed it to avoid making full payments on some of the $3.2 billion of bonds that have pushed it toward bankruptcy.
Jefferson County Commission President Bettye Fine Collins said the meeting will be held tomorrow at 10 a.m. If passed, it will keep in place a standstill with JPMorgan Chase & Co., bond insurers and other banks that, upon expiration, would have required the county to make an $83.5 million interest payment that it had no plan to do.
``We don't have the funds to cover these interest payments,'' Collins, a Republican, said in a telephone interview from Birmingham.
The extension will provide the county with another week to try to find a way to refinance bonds whose interest rates soared as high as 10 percent because of the U.S. financial crisis spawned by the subprime mortgage meltdown. The county is among U.S. states and cities in the $2.6 trillion municipal market whose finances have been pinched by debt costs that have risen more than fourfold in some cases, and it has prepared to file for bankruptcy should no agreement be reached.
Should the county seek court protection from creditors, it would be the biggest municipality to go bankrupt since 1994, when Orange County, California, was felled by bad investments.