WASHINGTON – The Washington Metropolitan Area Transit Authority's chief financial officer on Thursday contradicted press reports that the authority might hold talks with bondholders about restructuring its debt.
"WMATA's long term debt supports the capital program, which is more than adequately resourced by the jurisdictions, making it totally unnecessary to have any discussions with bondholders," said WMATA CFO Dennis Anosike.
The possible restructuring was mentioned in a Washington Post article on Wednesday about WMATA's retaining Kevyn Orr to advise its board on the authority's finances. Orr guided Detroit through its Chapter 9 bankruptcy, The paper cited unidentified WMATA officials as saying a restructuring of debt was possible.
Spokeswoman Sherri Ly confirmed Orr's firm, Jones Day, had been hired under a contract of up to $1.7 million.
Orr will specifically provide advice to the board and WMATA general manager Paul Wiedefeld on business planning, funding, and policy, authority officials told The Bond Buyer. Orr's firm was hired as WMATA is undergoing management and financial systems reviews the authority commissioned from consulting firms McKinsey & Co. and Ernst & Young last year.
WMATA had roughly $274.1 million in long-term bonds outstanding as of its latest audited financial report, filed on June 30, 2015. Those included $209.1 million of tax-exempt debt and $55 million of Build America Bonds.
The amount of debt is small compared to other transit authorities, Anosike said. The $274.1 million of outstanding bonds was down from about $287.8 million at the same time in 2014. WMATA also had about $386.7 million in total short-term debt as of June 30, a reduction from the approximately $500 million it had in 2014.
The notes were issued after a Federal Transit Administration audit in March 2014 found WMATA had mismanaged billions of dollars in funds. Federal funding slowed considerably after the audit, forcing WMATA to pursue the short-term financing.
WMATA on Jan. 8 issued a request for proposals from underwriting firms to underwrite a 2016 series of $220 million of Gross Revenue Transit Bonds with maturities of up to five years. In that document, the authority said it had submitted all parts of its corrective action plan to the FTA by June 30 of last year and that its grant request process is moving more quickly following the audit, which had slowed it down. The new bonds will be primarily designed to help the authority pay down its remaining short-term debt.
