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Philadelphia’s Please Touch Museum Defaults on Principal Payment

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Sept. 2 (Bloomberg) -- Philadelphia’s Please Touch Museum defaulted on its municipal debt for the third time yesterday as it failed to make principal payments, according to a filing.

The museum didn’t make a $670,000 principal payment to holders of its 4.125 percent bonds that matured yesterday, although investors received interest payments totaling $1.49 million from a reserve fund, according to a notice by the trustee, U.S. Bank National Association, posted today on the Municipal Securities Rulemaking Board’s website.

The institution, which says it was the first designed to serve children 7 and younger, started skipping debt obligations last year. Including yesterday’s action, the trustee has made three withdrawals from the debt-service reserves for interest payments, according to the filing.

The 38-year-old institution sold $60 million of tax-free debt in 2006 for an expanded facility with the expectation that fundraising would cover the payments. Museum officials decided to default last September as a way to start restructuring discussions with bondholders, Gretchen Santamour, a partner at Stradley Ronon Stevens & Young LLP in Philadelphia, said in July.

Joe Costello, a spokesman for the museum, didn’t have an immediate comment on the bond filing when reached by telephone after business hours. Santamour didn’t immediately respond to an e-mail requesting comment.

To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, Pete Young

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