One of the questions commonly asked of the Ole Seagull is, “Will the Branson Airport (Airport) make it?” The gist of his answer is, “I don’t know, but, I hope it does if there is no additional local governmental financing or “bail out” involved.”
But Seagull, “Doesn’t the announcement of Southwest Airlines (LUV) service to Branson reduce the likelihood that additional governmental financing or a “bail out” would be sought by the “Airport?” “Could be, but two things are fact, doo-doo is doo-doo and the LUV service into Branson Airport was formerly confirmed and announced with great fanfare at a Branson Landing Pep Rally in August of 2012.
Over four months later, on January 4, 2013, “UMB BANK, N.A., As Bond Trustee” published a notice about the Airport Bonds. In part that notice said, “The Company is not in compliance with its obligations under the Forbearance and Funding Agreement. Bondholders are specifically informed that, inter alia, the Company has failed to remit a mandatory $250,000 payment that was due under the Forbearance and Funding Agreement on December 31, 2012. Prior notices to Bondholders reflect that as part of the Forbearance and Funding Agreement, certain funds controlled by the Bond Trustee were made available to the Company in 2011 to support the Company’s continued development and expansion of the Airport and air service at the Airport (the “Advance”). The $250,000 payment that the Company did not make was designated as a partial repayment on the Advance. The Bond Trustee is informed and believes that the Company is also out of compliance with other terms of the Forbearance and Funding Agreement, including terms of that agreement regarding Airport operations and obligations of the Company under Air Services Agreements…
“Given the continuing default status of the Bonds, the terms of the Indenture and Bond Documents, the existing and ongoing Events of Default under the Indenture and Bond Documents, the Company’s publicly reported ongoing financial losses, the existence and continuation of the Forbearance and Funding Agreement, the Bond Trustee determined to not make the semi-annual interest payment of approximately $3.4 million scheduled for January 1, 2013. The terms of the Indenture provide that unpaid interest will remain a liability of the Company until paid.”
Now an Ole Seagull would confess that he doesn’t understand all the complexities of the bond markets etc. To him there appears to be a a situation where the Forbearance and Funding Agreement, has been violated, the original Airport Bondholders are not getting what was promised, and, to say the least, the “value” of the original bonds, per dollar of original cost, are a lot less today than when they were purchased.
In the movie “Forrest Gump,” as Forest ran through a pile of doo-doo one of the on lookers exclaimed, “Wow man you just ran through a big pile of dog doo-doo” and Forrest, running on, says, “It Happens.” The onlooker asks “What doo-doo?” to which Forrest responds “Sometimes” and continued running on, past the doo-doo, to true love and the movies touching bittersweet ending.
In terms of the airport’s financing, as least as of January 4, it would be an Ole Seagull’s opinion that an appropriate paraphrase of the Forrest Gump scenario, as relates to the airport’s financing would be an onlooker exclaiming, “Wow man you are running in a big pile of dog doo-doo” with the Airport saying, “All too often.” The onlooker asks, “What running in doo-doo?’ to which the Airport responds “Perpetually it seems” as it continues trying to run out of the doo-doo hoping that there will be enough LUV to ensure a happy ending. However bright or dim that hope may be, they are not alone in that hope, but doo-doo does happen “sometimes.”