U.S. bankruptcy judge orders Detroit financing fees disclosed
DETROIT, Nov 14 (Reuters) - Detroit must disclose the fee structure of a $350 million debtor-in-possession financing agreement, U.S. Bankruptcy Judge Steven Rhodes said Thursday, turning back the city's efforts to keep secret the cost of landing a controversial loan package.
The city and Barclays Capital had requested the fees be kept a secret because the details are commercially sensitive and might raise the price of the loan.
Detroit reached the loan agreement with Barclays, a unit of Britain's Barclay's Plc, in October, but the deal still must be approved by Judge Rhodes. About $230 million of the proceeds would be used to end interest-rate swaps contracts that the city has with Bank of America Corp's Merrill Lynch Capital Services and UBS AG. The swaps were related to debt sold in an effort to help Detroit make payments into city pension funds.
About $120 million of the DIP financing would be used to improve city services. The financing would be largely secured with a pledge of Detroit's income tax and casino tax revenue. Bond insurers and others have objected to Detroit's proposal to pay off its swap counterparties ahead of other creditors.
Detroit's unions, pension systems, bond insurers and others also objected to the Barclays fee letter being filed under seal. Rhodes, who is overseeing the historic municipal bankruptcy case Detroit filed in July, has scheduled a hearing beginning Dec. 10 to decide whether or not to approve the loan.