Wed 07/06/2022 11:05 AM
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Relevant Document:
Notice

Bond trustee U.S. Bank posted a notice to EMMA today that provides updates on the Friday, July 1, interest payments due on the various Series 2017 bonds issued in connection with the Elvis Presley-related Graceland Project. The Economic Development Growth Engine, or EDGE, industrial development board of the city of Memphis and Shelby County, Tennessee, originally issued $104.3 million in debt across five series of bonds in 2017. Continue reading for more distressed analysis from Reorg's Americas Municipals team, or request a trial to access all of Reorg's content.

The trustee made the $1.07 million interest payment and $655,000 principal payment due July 1 on the Series 2017A bonds. The principal payments were in accordance with the mandatory redemption requirements under the indenture. However, according to the notice, in order to make the July 1 interest payment and pay the amounts necessary for the mandatory redemption of the Series 2017A bonds, the trustee transferred $1.15 million from the Series A debt service reserve fund, or DSRF, to the corresponding debt service fund. The notice states that after such transfer, the balance remaining in the Series A DSRF is $4,728.54.

The notice states that the trustee also made the July 1 interest payment due on the Series 2017B bonds in the amount of $607,733 and a $480,000 principal payment in order to redeem certain Series 2017B bonds in accordance with the mandatory redemption requirements of the indenture. The trustee transferred $1.1 million from the Tourism Surcharge Incentive Payment Sub-Account to the Series 2017B DSRF in order to make the July 1 interest payment and the payment for the mandatory redemption of the Series 2017B bonds.

According to the notice, the events of default related to the failure to make the July 2021 and January 2022 interest payments on the Series 2017C bonds are continuing. Further, due to insufficient funds in the Series 2016C debt service fund and DSRF, the trustee was also unable to make the interest payment due on the bonds on July 1, an additional event of default on the Series 2017C bonds. The notice points out, however, that the Series 2017C events of default are not events of default with respect to any of the other Series 2017 bonds.

The notice states that while the occurrence of an event of default permits the trustee to pursue any available remedies, the trustee does not intend to do so with respect to the Series 2017C bonds. In addition, holders of 25% or more in aggregate principal amount of the bonds outstanding may request the trustee pursue remedies, provided such holders indemnify the trustee.

The trustee also notes that the July 1 debt service payments due on the Series 2017D and Series 2017E bonds were not made due to insufficient funds. Failure to make such interest payments does not trigger an event of default with respect to either series.
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