(Adds comment from board CFO, upcoming court hearing, bond sale
DETROIT Aug 22 The Detroit Board of Water
Commissioners agreed on Friday to repurchase nearly $1.5 billion
of water and sewer revenue bonds tendered by investors by a
deadline on Thursday.
Detroit, which filed the biggest-ever municipal bankruptcy
last year, launched the tender offer on Aug. 7 with the hope of
attracting enough of the $5.2 billion of outstanding debt and
replacing it with lower-cost bonds through a refinancing.
Nicolette Bateson, the board's chief financial officer, said
the bond refinancing is expected to save Detroit $207 million in
Detroit turned to the tender offer after most water and
sewer bondholders rejected the city's plan to adjust $18 billion
of debt in voting this summer. A key U.S. Bankruptcy Court
hearing to determine if that plan is fair and feasible is
scheduled to begin Sept. 2.
Judge Steven Rhodes, who is overseeing the case, will take
up the city's motion for the court to approve the bond tender at
a hearing on Monday.
The refinancing bonds could be issued through the Michigan
Finance Authority and priced by lead underwriter Citigroup,
possibly next week. The city has also said it could
alternatively privately place the bonds with financial
institutions. Detroit has set a Sept. 4 closing date for the
Besides raising money to repurchase the tendered bonds, the
issue would produce new money for the water system, which also
serves dozens of communities outside of Detroit.
(Reporting by Peter Suciu in Detroit; Additional reporting by
Karen Pierog in Chicago; Editing by Meredith Mazzilli and Leslie