Springfield, MO

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Branson Airport signs bond settlement

After years of defaults, trustee UMB Bank exchanges the initial bonds for equity in the insolvent airport

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With the exception of one payment, Branson Airport defaulted on its bonds for seven years, leading to a settlement allowing the issuance of new debt and changes in ownership, according to Municipal Securities Rulemaking Board documents.

Under the March 7 settlement agreement in a Minnesota court, bonds issued in 2007 to fund the Branson Airport’s 2009 opening were canceled. Bondholders were issued $32.5 million in new bonds in exchange for 65 percent of Branson Airport’s assets and equity, according to a March 28 bondholder update issued by UMB Bank, the bond trustee. The settlement also gave Branson Airport $3 million in working capital.

“Given ongoing financial losses, the company cannot cure the existing events of default,” the court order, signed by Judge Elizabeth Cutter, reads. “The proposed global settlement will create a better recovery for the bondholders than the status quo or other possible alternatives, and, therefore, is in the best interests of the bondholders.”

Documentation provided to Springfield Business Journal by Michael Hynes, a Branson-based aviation consultant, shows the value of the initial airport bonds from 2007, plus unpaid interest, legal and administrative costs, exceeded $189 million. The value of 65 percent of the airport’s assets and equity was calculated in the documents at $56.7 million.

“Somebody lost $120 million,” Hynes said of initial bondholders.

Hynes estimated there are now less than 10 bondholders, down from 14-26 initial buyers in 2007.

Jeff Bourk, Branson Airport’s executive director, acknowledged the settlement and court decision but declined to comment.

The settlement documents indicate that even if Branson Airport had directed all of its 2015-17 revenue toward paying off its debt, it still would not become solvent.

Branson Airport made an interim payment in 2016 “from extraordinary payments the company received,” but otherwise has not issued a payment since 2011, according to the settlement documents. The airport has reported a net loss for each year since it opened in 2009, with total losses of at least $91 million, according to MSRB data.

Amid the court decision, Branson Airport is working to rebound in 2018 with the addition of flights via Frontier Airlines and Silver Airways, according to past SBJ reporting.

Passenger activity has plummeted to the tune of 90 percent between 2014 and 2015, after Southwest Airlines and Frontier Airlines pulled service. The following year, a record low 1,600 passengers boarded planes at Branson Airport. Full 2017 data is not yet available. Activity peaked in 2013 with over 120,000 boarding passengers.

Frontier has announced a return, with service scheduled to resume in June, which would bring total destinations to five this year.

Editor Eric Olson contributed.


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