From left: Port Authority Executive Director Chris Ward, Silverstein Properties CEO Larry Silverstein and 4 World Trade Center
After a five-month effort, the Port Authority of New York & New Jersey has found a way to sell bonds financing the World Trade Center construction while appeasing existing Port Authority bondholders, the Wall Street Journal. As The Real Deal previously reported, if an agreement were not reached by the end of the year, Silverstein Properties would not have enough funding to continue construction on the 72-story 4 World Trade Center.
Port Authority had wanted to issue World Trade Center bonds. To ensure low interest rates it had intended to make the debt obligations on those bonds a priority over the general obligation bonds the agency had previously sold.
But general obligation bondholders, including Fidelity Investments, argued that such a move would be illegal, violating the bond documents that made them the preferred bondholders — crucial to their bonds’ values.
After months of debate with those initial bondholders, Port Authority is in the early stages of appeasing their demands and issuing World Trade Center bonds that don’t have debt obligation priority over the general obligation bonds.
Though the debt would cost the agency tens of millions more dollars, it would provide financing for, and prevent a stoppage of, construction at 4 World Trade Center. The proposal still needs approval from the agency board and investors. [WSJ]