The Liberty County Development Authority approved the decision Monday to start decreasing its $25,177,965.38 debt to SunTrust Bank starting in July or August.
The total debt includes a $14,517,431.85 note for Tradeport East, a $1,695,800 note for Tradeport West and an $8,964,733.53 note for the water reclamation facility.
“This debt service will be the annual amount due to SunTrust as a result of the rescheduled payments. This amount includes all the interest and some principal,” LCDA Director of Administration and Finance Carmen Cole said. “Our budget forecast indicates we will be able to pay the proposed payments and stay compliant with all other SunTrust covenants.
“If we fail to make the payments, it would be just the same if you, as an individual, cannot make payments to a financial institution; the loans could be called due and payable. If we were unable to fulfill that demand, SunTrust would have all the rights and remedies afforded it under the terms of the related contracts and applicable law. I do not know if dissolution (of the LCDA) would be required of the authority in that event, although I do not necessarily think it would,” she said.
The financial restructuring discussion began in early 2010 and took a little longer than expected to resolve because of SunTrust staff changes, Cole said.
Additional financing costs will include $200,000 in bank closing costs and an estimated $1,000,000 in swap unwind costs.
“In essence, SunTrust and the LCDA worked diligently on a joint concern and concluded with an arrangement that will work for both,” LCDA CEO Ron Tolley said. “The restructuring and refinancing is very beneficial to the authority in that it provides a lock on historically low interest rates averaging 3.1 percent, allows us to pay down the debt on a faster basis, allows for flexible payment patterns and has no pre-payment penalties, which is important for when the economy recovers.”
The LCDA already has been granted three structuring extensions this fiscal year. The fourth is June 30, a date agreed upon by both parties.
“It is the end of our fiscal year, as well as the end of an important quarter for banks, because mid-year reports are all due as of that date. We, LCDA and SunTrust, want to have all the proper documentation finalized by that date,” Cole said.
According to LCDA board Secretary Brian Smith, the authority will make monthly payments to SunTrust. He said that financially, SunTrust is doing OK.
Although board members agreed to approve the payments, board member and County Commission Chairman John McIver said he expects to see a monthly financial report of where the authority stands with its payments. Others agreed as they made the motion and voted to approve the restructuring plan.
“Nobody likes to be in this position,” board member Al Williams said. “It’s a nervous time.”