UPDATE 1-Alabama county, creditors OK new terms to end bankruptcy
By Michael Connor
Oct 30 (Reuters) - Alabama's Jefferson County and Wall Street creditors have reached agreement on a revised plan to end the second-largest U.S. municipal bankruptcy, county officials said on Wednesday.
The new terms were not made public, but county officials had said they needed $350 million more in concessions because interest rates had risen since June, when JPMorgan, hedge funds and other creditors reached a tentative settlement to end the $4.2 billion bankruptcy.
County commissioners will consider the revised plan on Thursday, when details will be released, Jefferson County officials said in a statement.
Alabama's biggest county filed for Chapter 9 bankruptcy nearly two years ago, mostly because of overwhelming sewer debt, but its case was dwarfed by Detroit's bankruptcy filing last summer.
"The Jefferson County Commission will consider a modified financing plan that incorporates the agreements in principle we have reached with representatives of all of the major sewer creditor groups: JP Morgan, the bond insurers, the hedge funds and the liquidity banks," the county officials said.
The June agreement, which still must be approved by a federal judge, handed big losses to JPMorgan and others, and relied on a planned sale of $1.9 billion of new bonds to replace soured sewer-system bonds with a face value of about $3.1 billion.
But two weeks ago, county officials threatened to withdraw the deal, saying rising interest rates had shot up over the summer and reduced the amount of new bonds the county could issue, and they asked creditors to make further concessions.
Analysts at Moody's Investors Service said this week that the June plan translated into losses of about 40 cents on the dollar for sewer-system creditors. The new concessions sought by the county would add 10 cents to those losses, the Moody's analysts said.
Spokesmen at creditors JPMorgan and BNY Mellon had no comment.
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