(Adds comment from board CFO, upcoming court hearing, bond sale details)
DETROIT, Aug 22 (Reuters) - 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 cash flow.
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 deal.
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 Adler)