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Tuscaloosa, Ala., to pay off only 20.92% of $31.3 million in bonds
By Devika Patel
Knoxville, Tenn., March 23 - Wells Fargo Bank, NA, the trustee for the City of Tuscaloosa, Ala.'s $51.05 million in outstanding series 2005A, series 2005B and series 2005C special care facilities financing authority residential care facility mortgage revenue bonds, delivered a notice to bondholders regarding its ability to pay off the notes.
The proceeds of the bonds were lent to a borrower and used to develop and construct a senior housing facility known as "Capstone Village" on the University of Alabama campus in Tuscaloosa, Ala. Subsequently, the housing facility encountered financial difficulties.
The university agreed to buy the facility from Capstone Village Inc., the original borrower, on terms Wells Fargo believes will be favorable to bondholders. The sale closed on Thursday.
The net proceeds from this sale were $9.12 million and will be distributed among the bondholders and another senior lender, which holds all $19.75 million of the series 2005C bonds. Added to the funds remaining in the trust estate, the remaining investors will receive an aggregate of $9.5 million.
Wells Fargo is now prepared to distribute this amount among the investors. The amount will first be applied pro rata to interest payments due on the bonds as of March 24 and then to principal.
Wells Fargo (612 667-7337) will pay all accrued interest. It will pay $6.55 million in principal, which is about 20.92% of the outstanding balance.
The special record date to participate in this distribution is March 18. The distribution will be available after March 24, with no deadline for investors to participate.
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