July 25 (Bloomberg) -- American Roads LLC, which operates highways including the mile-long Detroit Windsor Tunnel linking the U.S. with Canada, sought bankruptcy court protection, citing $830 million in debt related to swaps and bonds.
The Detroit-based company listed more than $100 million in assets in Chapter 11 papers filed today in U.S. Bankruptcy Court in New York.
The filings “are not the result of the recent bankruptcy filing of Detroit -- although Detroit’s financial situation has contributed to the difficulties,” Chief Executive Officer Neal Belitsky said in court papers.
Traffic-related revenue declines from toll operations, most in Alabama, involve “the economic recession, the volatility of gas prices, reduced travel and discretionary spending,” toll increases, Congressional mandates for increased documentation, and events including the Deepwater Horizon BP spill in the Gulf of Mexico, a tornado “and a declining population in the Detroit area,” Belitsky said.
Among the company’s largest unsecured creditors listed in court papers are holders of about $500 million in bonds due in 2026, with the trustee listed as Bank of New York Mellon.
Other affiliates filing besides the Detroit tunnel include Alabama Toll Operations LLC, Central Alabama River Parkway LLC, Alabama Emerald Mountain Expressway Bridge LLC, and Alabama Black Warrior Parkway LLC, according to court papers.
The company operates the international tunnel under a lease, and makes annual rental payments to the city of Detroit, according to Belitsky.
A unit of Syncora Holdings Ltd. of Bermuda insured the swap and bond indebtedness, and under a proposed pre-packaged plan of reorganization, Syncora will take ownership of the company, Belitsky said.
Under the proposed plan, “holders of the bonds will receive no distributions” and may elect to take a one-time cash payment of 20 percent of the principal, according to court papers. The company has requested an Aug. 28 plan-confirmation hearing with the court.
The company is seeking immediate permission to use cash-on-hand to continue operations as usual during reorganization, according to court papers.
The case is In re American Roads LLC, 13-bk-12412, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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