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Branson Airport’s recent settlement with bond trustee UMB Bank gives bondholders 65 percent ownership of the airport’s assets and equity.
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Branson Airport’s recent settlement with bond trustee UMB Bank gives bondholders 65 percent ownership of the airport’s assets and equity.

Branson Airport signs settlement after years of bond defaults

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Last edited 2:08 p.m., April 25, 2018

With the exception of one payment, Branson Airport defaulted on its bonds for seven years, leading to a settlement allowing the issuance of new debt and changes in ownership, according to Municipal Securities Rulemaking Board documents.

Under the March 7 settlement agreement in a Minnesota court, bonds issued in 2007 to fund the Branson Airport’s 2009 opening were canceled. Bondholders were issued $32.5 million in new bonds in exchange for 65 percent of Branson Airport’s assets and equity, according to a March 28 bondholder update issued by UMB Bank, the bond trustee. The settlement also gave Branson Airport $3 million in working capital.

“Given ongoing financial losses, the company cannot cure the existing events of default,” the court order, signed by Judge Elizabeth Cutter, reads. “The proposed global settlement will create a better recovery for the bondholders than the status quo or other possible alternatives, and, therefore, is in the best interests of the bondholders.”

Documentation provided to Springfield Business Journal by Michael Hynes, a Branson-based aviation consultant, shows the value of the initial airport bonds from 2007, plus unpaid interest, legal and administrative costs, were more than $189 million. The value of 65 percent of the airport’s assets and equity was calculated at $56.7 million, according to the documents. Hynes estimated there are now less than 10 bondholders, down from 14-26 initial buyers in 2007.

“Somebody lost $120 million,” Hynes said of initial bondholders.

The settlement court documents indicate that even if Branson Airport had directed all of its 2015-17 revenue toward paying off its debt, it still would not have been able to make its bond payments.

Branson Airport made an interim payment in 2016 “from extraordinary payments the company received,” but otherwise has not issued a payment since 2011, according to the settlement documents. The airport has reported a net loss for each year since it opened in 2009, with total losses of at least $91 million, according to MSRB data.

Jeff Bourk, Branson Airport’s executive director, acknowledged the settlement and court decision but declined to comment.

Amid the court decision, Branson Airport is working to rebound in 2018 with the addition of flights via Frontier Airlines and Silver Airways, according to past SBJ reporting.

Editor Eric Olson contributed.

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