Watch Jefferson County Commission hearing live
The Jefferson County Commission is meeting now to review a counter-proposals from creditors lead by JP Morgan and decide whether to accept it or file for Chapter 9 bankruptcy. Live feed via the Birmingham News.
To recap, Jefferson County, Alabama is getting a lot of attention as it negotiates with the holders of $3 billion of sewer bonds. The county would like to pay $2 billion to settle the $3 billion of bonds outstanding and limit the rate increases county residents would have to pay. This arrangement would pay bondholders (led by JP Morgan) 66 cents on the dollar — not a great recovery but not outrageous either. Bondholders want the state to guarantee this new arrangement and stand ready to pay in the event of another default.
Update on creditor offer terms (August 12, 2011) via the Birmingham News:
THE CREDITORS’ NEW PLAN
> Refinance a principal amount of $2.326 billion, with $233 million going into a debt service reserve, $23.3 million paying issuance costs and $2.07 billion to redeem all outstanding sewer warrants based on negotiated concessions.
> Create an independent public corporation to own, manage and finance the sewer system.
> Dismiss all lawsuits involving the county and warrant holders related to the sewer system.
> Propose legislation regarding the state’s moral obligation pledge and a solution to the county’s general fund issue. The plan does not specify what that solution would be.