Preliminary Approval Granted on 876 Bondholders/Port Authority Settlement

The Ramsey County District Court granted preliminary approval of a settlement agreement between Plaintiffs 876 Bondholders and the St. Paul Port Authority on September 23, 2011.

Keith Broady of Lommen Abdo Law Firm, lead attorney for Plaintiffs, recommended approval of the settlement agreement to the Court because:

  1. The settlement ends over five years of contentious litigation with the Port Authority, including an appeal to the Minnesota Supreme Court in 2009 in which the bondholders prevailed.
  2. Under the proposed settlement agreement, the Port Authority will make full payment of all current and past due interest through December 1, 2011 and bondholders will continue to receive payments on their 876 Bonds for over twenty years through September 1, 2032, as opposed to having all bonds cashed out at a discounted amount in 2006.
  3. Approximately $10 million will be used for a Dutch auction in which bondholders who wish to tender their 876 Bonds for a discounted principal amount will have an opportunity to sell their bonds.
  4. Both the short term and long term returns on 876 Bonds will be substantially better for the bondholders than if the Port Authority had cashed out all 876 Bonds in 2006.

The court noted that the proposed settlement appeared to be fair, reasonable and adequate to each and all of the holders of the General Revenue Bonds issued under the Basic Resolution and provided preliminary approval pending a final hearing on the proposed settlement on October 27th at 1:30 p.m.

The Court further found that the Plaintiffs are authorized to represent each and all 876 Bondholders to protect and enforce their rights and enforce the performance of all covenants and duties of the Port Authority as set forth in the Basic Resolution. The court then certified the class for the settlement.

The October 27th hearing will address whether the proposed settlement should be approved, whether the final judgment should be entered dismissing Plaintiffs’ claims with prejudice, whether to approve Lommen Abdo’s attorney fees and costs, and whether to approve any additional fees and costs not previously approved. Notice shall be provided to each of the bondholders, as far as possible, for their consideration of the settlement. Objections may be filed as provided by the Court and will be heard as allowed by the Court. Read a full copy of the Court’s Order Certifying Class and Preliminarily Approving Settlement.

Read the Star Tribune article and the Finance & Commerce article about the proposed settlement.