SAN FRANCISCO — The Asian Art Museum’s foundation in San Francisco said it has received a 30-day extension on some obligations related to the expiration of a letter of credit from JPMorgan Chase & Co. Tuesday backing $120 million in bonds.
The foundation’s 30-day forbearance agreement between JPMorgan and MBIA will give the parties time to negotiate a “suitable” restructuring of the 2005 variable-rate revenue bonds, museum spokesman Tim Hallman said in a statement late Tuesday.
Hallman said negotiations continue at very high levels at San Francisco City Hall.
The expiration of the letter of credit forced JPMorgan to make a tender offer to bondholders.
Moody’s Investors Service said in a report Friday that the negotiations centered on the time frame of the potential accelerated payments that should have kicked in at a tight five-year schedule after the expiration of the LOC.
Due the expiration of the LOC, Moody’s dropped the foundation’s underlying rating to junk status, to Ba1 from Baa1, and kept it on watch for another downgrade.
If the foundation is required to repay the bank bonds in quarterly payments over five years, its annual payments would hit $29.85 million plus interest, with the first $6 million payment due March 21, according to Moody’s.
The $120 million of bonds, which were issued through the California Infrastructure and Economic Development Bank, are also hedged by an interest-rate swap with JPMorgan.
The foundation is the fundraising arm of the museum, which has the largest Asian art collection in the Western world.
