Detroit won a commitment from Barclays Plc for $275 million in financing to fund the city’s exit from its landmark bankruptcy if a judge approves its debt-cutting plans at a trial slated to start next week, Bloomberg reported yesterday. Detroit is seeking court approval to eliminate more than $7 billion of its $18 billion in obligations to retired city workers, bondholders and other creditors. The money from Barclays would be used to pay off $120 million that Detroit borrowed to help fund its reorganization, pay some creditors and revitalize the city. The tax-exempt bonds to be issued as part of the financing will pay an interest rate equal to a municipal swap index plus 4.25 percent. The taxable bonds will be based on the Libor rate plus 4.75 percent. “We are very pleased to have secured this exit facility and are encouraged by the reception we received from the broader financial community,” Detroit Emergency Manager Kevyn Orr said. Syncora Guarantee Inc., which insures part of $1.4 billion in pension debt that the city seeks to cancel, plans to attack the so-called grand bargain between the city and a group of foundations that seek to keep Detroit’s art collection out of the hands of creditors. The case is In re City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).
