The Detroit Water and Sewerage Department today approved a deal to allow the re-financing of about $5.2 billion in debt.
After weeks of confidential mediation sessions, the city and its water department bond holders and insurers reached the agreement. It allows the city to buy back existing bonds and then re-sell them at a lower rate to pay off old debt. Commissioners for the Detroit Water and Sewerage Department say the deal will save customers money and reduce some operating costs for the department.
Here’s what was presented to commissioners at a meeting today.
The move could speed up the city’s exit from bankruptcy. Water department creditors voted against the Plan of Adjustment but the new deal has them giving up that opposition if they take the voluntary debt trade.
“We think this opportunity provides benefits to the DWSD system and our customers,” Jim Fausone, chair of the board of water commissioners, said in a statement. “Our action today represents the first step towards a potential amicable resolution that is good for the customers, bondholders, the City, the financial industry and for the system.”
The city has not provided an estimate of the savings on its debt it could realize as part of the agreement.