Riverside Military Academy of Georgia defaulted on $48.5 million in bond debt earlier this month and Fitch Ratings followed by downgrading the debt to D from C.
The academy failed to make a principal payment due at the start of this month and drew on a debt service reserve fund to make a $1.22 million interest payment.
The revenue refunding bonds were issued in 2017 by the Gainesville and Hall County Development Authority.
The bonds were issued with yields to maturity of 4.25%, 4.9%, 5.065% and 5.187% in 2027, 2037, 2047 and 2052, respectively.
Bond trustee UMB Bank organized a bondholder group, which holds a majority of par value. The group has been negotiating a forbearance agreement with Riverside since mid-February. UMB declined to offer further comment.
"Riverside Prep is working proactively with bondholders and all stakeholders to ensure our important mission continues without interruption," Mitch Clarke, director of marketing at Riverside told The Bond Buyer. "With federal securities laws in mind, it is imperative that all stakeholders receive information at the same time. Therefore, all communications to the market will be posted on EMMA."
The bonds are secured by a first lien on the academy's campus. The debt service reserve fund has $2.47 million.
Fitch said the default led to the downgrade. An upgrade could stem from a demonstrated intent to make timely payments on debt service obligations, execution of a realistic restructuring plan without deferral of payments, or asset sales or philanthropic efforts that generate significant cash, Fitch said.
Riverside Military Academy in Gainesville, about 60 miles northeast of Atlanta, is a college prep school for grade 6 to 12 boys.
The default comes a few months
