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Branson Airport defaults, enters forbearance agreement

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Privately owned Branson Airport LLC entered into a forbearance and funding agreement April 12 with UMB Bank, the trustee that oversees $114 million in revenue bonds issued in mid-2007 to fund the construction of the airport.

According to the agreement filed with the Municipal Securities Rulemaking Board, Branson Airport LLC must meet monthly and quarterly revenue and enplanement benchmarks through June 30, 2012, or bondholders could take control of operations.

Airport officials missed a $1.65 million debt payment to bondholders on Jan. 3, triggering the need for a forbearance agreement, which serves as temporary relief granted by a lender that could legally foreclose on a borrower in default.

According to the airport’s budget, enplanement benchmarks range from 4,917 in April 2011 to 22,799 in June 2012. Monthly revenue benchmarks range from $413,673 in April to a high of $716,686 in October.

The forbearance agreement stipulates the airport meet at least 70 percent of its projected enplanements and revenues. The terms in the forbearance agreement can be extended through June 30, 2013, should UMB and bondholders find that the airport meets its financial gates.

The move ends speculation that a restructuring of debt would be required for the airport that has lost $24.3 million since its May 2009 opening, according to its filings with the Municipal Securities Rulemaking Board.

Michael Hynes, an aviation consultant and operator of Hynes Aviation Industries in Branson, who reviewed the 54-page agreement at, said the length of the agreement speaks volumes about the level of distrust between the bondholders and the operators of the only privately held commercial airport in America.

With a total of 19 termination clauses in the document, Hynes said bondholders are effectively telling the airport, “‘If you don’t meet these projections, it’s the end of the world.’”

As part of the agreement, airport operators must place $3 million in its operating fund by June 11.

Though revenue and passenger counts have missed initial projections, Branson Airport CEO Stephen Peet said he is pleased to have the agreement in place, and he expects bright days ahead.

“However we got here, we are very pleased with the position we are currently in,” Peet said.

Peet said the airport recorded roughly 92,000 enplanements in 2010, but he declined to comment on airport financials.

According to an unaudited income statement for the first quarter, which is said to be the slowest quarter of the year, the airport reported an operating loss of $4.4 million. Net losses in the first quarter of 2010 were $4.2 million, according to Municipal Securities Rulemaking Board filings.
The city responds
As airport operators work to meet projections, Branson officials responded with concern about the airport’s financials.

Under an agreement with the airport’s regional transportation development district, the city pays the district $8.24 per tourist flying into Branson.

Branson Board Alderman Mike Booth said the city wants the airport to disclose more financial information as it considers what it will appropriate to the airport. The city already has $35,000 budgeted, but officials recently received a $327,770 bill for passengers flying into the airport between July and the end of December, according to the city’s public information director Jerry Adams.

“The city should be granted the right to review all the financials to see if the airport is even going to be there to receive the check, if you will,” Booth said.

Adams said the city has until June 9 to pay the bill.

Booth said its agreement with the airport is based on what the city is able to appropriate, and the alderman have yet to determine whether increases in sales tax dollars would justify paying the full bill. He said the city has paid its bills in full to this point.

For more information on this story, check out the May 6 Early Friday Digital Edition and the May 9 print edition of the Springfield Business Journal. 
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