Bankrupt Alabama county OK's debt deal with European bank

BIRMINGHAM, Ala. Thu Feb 14, 2013 6:30pm EST

BIRMINGHAM, Ala. Feb 14 (Reuters) - Officials in Alabama's bankrupt Jefferson County approved a deal on Thursday with European Depfa Bank Plc to cut interest charges on about $162 million of the county's school debt.

Although the "plan support agreement" saves only about $1 million a year for the county, which in 2011 filed a $4.23 billion municipal bankruptcy, the resolution passed by the Jefferson County Commission said the deal would likely help the county hammer out a broader adjustment plan with its Wall Street creditors.

Home to Birmingham, Alabama's biggest city, Jefferson County was primarily driven into what is the biggest bankruptcy ever by a U.S. local government by massive sewer-system debt now estimated at $3.2 billion.

Some creditors and county officials are meeting privately to work out a possible plan likely to require reductions in interest rates and other concessions by creditors such as JPMorgan Chase & Co. The plan is needed for Jefferson County to exit bankruptcy protection. The county filed for bankruptcy in November 2011.

A representative of Depfa, based in Dublin but supervised and supported by the German government, did not immediately respond to an inquiry for comment on the agreement.

Separately, Jefferson County won dismissal on Thursday of a lawsuit by Birmingham's city government against the closure on Dec. 31 of in-patient care at Cooper Green Mercy Hospital.

As part of severe cost cutting, which has seen current fiscal year spending shrivel by $107 million to $205 million, county officials eliminated in-patient care at Cooper Green used mostly by poor people in Birmingham.

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (18)
drewNbama wrote:
Jefferson county is full of liberals. You reap what you sow guys.

Feb 14, 2013 8:03pm EST  --  Report as abuse
drewNbama wrote:
Look at the demographics of Jefferson county. Says it all.

Feb 14, 2013 8:05pm EST  --  Report as abuse
jimmr wrote:
A preview of the whole country unless we stop spending like idiots.
Soros makes billions on currency deals, banks make billions on taxpayer funded free money and the poor and middle class will bear the burden.
Some day the politicians may have to pay for their profligate spending.

Feb 14, 2013 8:19pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.