Las Vegas Monorail judge likes changes made to reorganization plan

By Caroline Salls

Pittsburgh, May 9 - The judge in Las Vegas Monorail Co.'s Chapter 11 bankruptcy case said the company has addressed issues that led to the rejection of a previous version of its plan of reorganization, and it has shown that it will likely not need further financial reorganization beyond the current case, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Nevada.

In his memorandum on the feasibility of the latest version of Las Vegas Monorail's plan, judge Bruce A. Markell said the company obtained an opinion on its reorganization value and then used that valuation to significantly reduce the reorganization debt contained in its plan.

Markell said that Las Vegas Monorail abandoned its attempt to preserve the tax exempt status of interest payments on its reorganization debt, took a serious look at its capital expenditures budget and made significant revisions to its equipment purchase and replacement schedule.

In addition, the judge said the company "jettisoned many of the unsubstantiated assumptions underlying its previous confirmation attempt."

As previously reported, the court found that the debt service on Las Vegas Monorail's remaining debt was unsupportable under the rejected version of the plan given the company's projected revenues and capital needs.

Markell said that the current plan addresses these problems, as it proposes to cancel the outstanding bonds and to issue $13 million of bonds to replace them at a general interest rate of 5.5%. The judge said this is a significantly reduced rate from the 9.55% rate proposed in the previous plan.

As a result, Markell said the new plan cancels 98% of the existing debt, "a huge discount by any reckoning and an almost two-thirds reduction in debt canceled from the prior plan."

Las Vegas Monorail, a Las Vegas non-profit monorail operator, filed for bankruptcy on Jan. 13, 2010. Its Chapter 11 case number is 10-10464.

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