HomeMy WebLinkAboutAuthorizing the Issurance of $6,000.000 City of South Bend Economic Development First Mtg Revenue Bonds ORDINANCE No. 7582-85
Passed by the Common Council of the City of South Bend, Indiana
December 16, 19 85
Attest: , t�C'
City Cit Clerk
IRENE K. GAMMON
Attest: ®-� A- � _ ti i� President of Common Council
Presented by me to the Mayor of the City of South Bend, Indiana
December 17, Ig 85
City Clerk
IRENE K. GAMMON
Approved and signed by me / L/74: z g g5
Mayor
GENERAL ORDINANCE NO. ?c '24'r
AN ORDINANCE AMENDING GENERAL ORDINANCE NO. 6622-79 ,
PASSED AUGUST 13 , 1979 , AUTHORIZING THE ISSUANCE OF
$6 ,000 ,000 CITY OF SOUTH BEND, INDIANA, ECONOMIC
DEVELOPMENT FIRST MORTGAGE REVENUE BONDS (SOUTH
BEND FORGE, INC. , PROJECT) (ABS INDUSTRIES , INC, -
GUARANTOR) AS AMENDED AND GENERAL ORDINANCE NO.
6781-80 , PASSED MAY 27 , 1980 , AUTHORIZING THE
ISSUANCE OF $3 ,000 ,000 CITY OF SOUTH BEND, INDIANA,
ECONOMIC DEVELOPMENT FIRST MORTGAGE REVENUE BONDS ,
SERIES 1980 (SOUTH BEND FORGE, INC. , PROJECT) (ABS
INDUSTRIES , INC. - GUARANTOR) AS AMENDED; AND
AUTHORIZING THE EXECUTION AND DELIVERY OF AMENDED
BONDS AND OF A THIRD SUPPLEMENTAL TRUST INDENTURE
AND THIRD SUPPLEMENTAL LOAN AGREEMENT.
On August 13 , 1979 , the Common Council (the "Legislative
Authority") of the City of South Bend, Indiana, (the
"Issuer") duly passed General Ordinance No. 6622-79 (the
"Original Bond Legislation") providing for the issuance of
$6 ,000 ,000 Economic Development First Mortgage Revenue Bonds
(South Bend Forge , Inc. , Project) (ABS Industries , Inc. -
Guarantor) , dated as of July 1 , 1979 , (the "Series 1979
Bonds") for the purpose of making a loan to assist South Bend
Forge , Inc. (now known as Michiana Forge, Inc. ) (the
"Company") in the financing of costs of acquiring ,
constructing and equipping real and personal property
comprising economic development facilities to be owned and
operated by the Company.
In order to provide revenues sufficient to pay the
principal of, premium, if any, and interest on the Series
1979 Bonds , the Issuer and the Company entered into a Loan
Agreement dated as of July 1 , 1979 , (the "Original Loan
Agreement") .
In order to secure the Series 1979 Bonds the Issuer and
First Bank and Trust Company of South Bend (now known as
1st Source Bank) , as Trustee (the "Trustee") , entered into a
Trust Indenture dated as of July 1 , 1979 , (the "Original
Indenture") .
On May 27 , 1980 , the Legislative Authority duly passed
General Ordinance No. 6781-80 (the "1980 Bond Legislation")
providing for the issuance , pursuant to the provisions
regarding Additional Bonds contained in the Original Inden-
ture , of $3 ,000 ,000 Economic Development First Mortgage
Revenue Bonds , Series 1980 (South Bend Forge , Inc. , Project)
(ABS Industries , Inc. - Guarantor) , dated as of May 1 , 1980 ,
•
(the "Series 1980 Bonds") for the purpose of paying costs of
the acquisition, construction and installation of additional
economic development facilities to be owned and operated by
the Company.
In order to provide sufficient and additional revenues
to pay the principal of, premium, if any, and interest on the
Series 1980 Bonds , the Issuer and the Company entered into a
First Supplemental Loan Agreement dated as of May 1 , 1980 ,
(the "First Supplemental Loan Agreement") .
In order to secure the Series 1980 Bonds , the Issuer and
the Trustee entered into a First Supplemental Trust Indenture
dated as of May 1 , 1980 , (the "First Supplemental Trust
Indenture") .
The company has requested that the Legislative
Authority amend certain provisions of the Original Bond
Legislation, the 1980 Bond Legislation, the Series 1979 Bonds
and the Series 1980 Bonds al as previously amended, in order
to maintain the economic viability of the facilities and
thereby preserve employment opportunities within the Issuer
and benefit the health and welfare of the Issuer by
continuing to provide for the expansion of economic
development facilities within the Issuer.
The Company, National City Bank, Cleveland, Ohio ,
and ABS Industries , Inc. , have each expressed an intention to
consent to such amendments for the purpose of National City
Bank purchasing the Bonds from the current bondholders . The
finalization of such a purchase is subject to the consent of
the current bondholders .
Two (2) copies of this Ordinance are on file in the
office in the Clerk of the Legislative Authority for public
inspection.
NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF
THE CITY OF SOUTH BEND, INDIANA, that:
Section 1 . Amendments to the Original Bond Legislation
and the Series 1979 Bonds .
(a) Exhibit A to the Original Bond Legislation is
hereby amended by replacing that Exhibit with the
form of the new Exhibit A attached hereto. Such new
•
Exhibit A shall constitute the amended form of
Series 1979 Bonds , amended hereby.
(b) The definition of "Interest Payment Date" in
Section 3 of the Original Bond Legislation is
hereby amended to read as follows :
"Interest Payment Date" means the first day of each
month commencing February 1 , 1986 , and continuing
to and including January 1 , 1991 .
Section 2. Amendments to the 1980 Bond Legislation.
(a) Exhibit A to the 1980 Bond Legislation is hereby
amended by replacing that Exhibit with the form of
Exhibit B attached hereto. Such Exhibit B shall
constitute the amended form of Series 1980 Bonds ,
as amended hereby.
(b) The Definition of "Interest Payment Date" contained
in Section 3 of the 1980 Bond Legislation is hereby
amended to read as follows :
"Interest Payment Date" means the first day of each
month commencing February 1 , 1986 , and continuing
to and including January 1 , 1991 .
Section 3. Execution of Documents . The Mayor, the Clerk
and such other officials of the Issuer as are appropriate are
authorized and directed to make the necessary arrangements
with the Holders to establish the date , location, procedures
and conditions for the delivery to the Holders of the amended
Series 1979 Bonds and Series 1980 Bonds in the amended forms
attached hereto as Exhibit A and Exhibit B, respectively, and
to take all steps necessary to effect due execution and
delivery of the amended Series 1979 Bonds and Series 1980
Bonds to the Holders under the terms of this Ordinance, and
to exchange the amended Series 1979 Bonds and Series 1980
Bonds for the Series 1979 Bonds and Series 1980 Bonds cur-
rently outstanding which shall then be cancelled by the
Trustee. Those officials , as appropriate , are further author-
ized and directed to execute such certificates and instru-
ments as are , in the opinion of Counsel to the Issuer and
Kramer & Murphy, P.C. , necessary or appropriate to consummate
the transactions provided for by this Ordinance.
The Mayor and the Clerk are hereby further authorized
and directed to execute a Third Supplemental Trust Indenture
and Third Supplemental Loan Agreement substantially in the
form attached hereto as Exhibit C, which instrument is hereby
approved, with such changes therein not inconsistent with
this Ordinance and not substantially adverse to the Issuer as
may be permitted by applicable state law, the Original Trust
Indenture , the First Supplemental Trust Indenture and the
Second Trust Indenture and as are approved by such officers .
The approval of such changes by such officers , and that such
are not substantially adverse to the Issuer, shall be conclu-
sively evidenced by the execution of such instrument.
Section 5 . Effective Date. This Ordinance shall be in
full force and effect from and after is passage by the Common
Council , signed by the President of the Common Council and
approved by the Mayor. c..._..6 f,
sic ent , Col .! Council
Adopted by this Common Council on the day of
December, 1985 , and approved by the Mayor on the day of
December, 1985 .
City Clerk
HA IN CLERK'S OFFICE
tat READING I S- i� DEG-g �� 1 1 1985
PUBLIC HEARING ( •I{,• ," I E E AMMO
2nd READING ( A 6( • �� �9
NOT APPROVED , V aP K SO, BR ID IM
REFERRED ■
,....c....PASSED 1 '4• i 4)'"�S' /�,....c....
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„ . , - --_
KRAMER & MURPHY
PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
SUITE 200
F. RICHARD KRAMER
205 W.JEFFERSON BLVD.
MICHAEL C. MURPHY SOUTH BEND, 1[ND]ANA 4 "'®n 219-233-8275
DEAN A.COLVIN
December 11 , 1985
South Bend Common Council
City Clerk' s Office
County-City Building
South Bend, Indiana 46601
Re: South Bend Forge Project
Members of the South Bend Common Council:
Enclosed please find two copies each of Amended Bonds ,
payment schedule and Third Supplemental Trust Indenture and
Third Supplemental Loan Agreement and a form of Ordinance in
connection with the December 16, 1985 , meeting of the South
Bend Common Council. This Resolution provides for the amend-
ment of the Economic Development Revenue Bonds issued in the
South Bend Forge , Inc. ("SBF") Project.
On August 13 , 1979 , the Common Council of the City of
South Bend passed its General Ordinance No. 6622-79 authoriz-
ing the issuance of $6 ,000 ,000 .00 of Economic Development
First Mortgage Revenue Bonds for the South Bend Forge Project .
On May 27 , 1980 , the South Bend Common Council passed its
General Ordinance No. 6781-80 authorizing the issuance of an
additional $3 ,000 ,000 .00 of Economic Development First
Mortgage Revenue Bonds . Thereafter, in September, 1983 , the
South Bend Common Council passed an Ordinance authorizing the
execution and delivery of amended bonds and a Second Supple-
mental Trust Indenture and Second Supplemental Loan Agree-
ment. The purpose of these amendments was to permit the sale
of the stock of South Bend Forge from ABS Industries , Inc.
("ABS") , to Steven J. Bandawat ("SJB") . ABS continued to
guarantee the payment of the bonds after the sale of the SBF
stock.
In 1984 , the Series 1979 Bonds and the Series 1980 Bonds
went into default. Currently there is a principal balance
outstanding of $6 ,300 ,000 . 00 . Through extended negotiations
among the various bondholders , SBF, ABS and the Trustee , it
appears that an agreement has been reached by which the
default would be remedied. The crux of this agreement would
be that the National City Bank of Cleveland, Cleveland, Ohio,
would purchase the bonds from the current bondholders .
As a condition to such a purchase , National City Bank
requires that the bonds be amended to provide :
a. The payment of the bonds over a period of sixty
months .
b . Interest at 75% of National City Bank of
Cleveland' s prime lending rate or at a fixed rate
of 8 .75% .
c. Monthly payments of principal and interest.
d. Inclusion of certain yield protection provisions in
the bond documents which would go into effect in
the event that the corporate tax rate changes .
Upon the passage of an ordinance authorizing such
amendments , National City Bank of Cleveland has expressed its
intention to purchase the bonds from the existing bondholders .
Closing would be subject to the approval of these existing
bondholders . In the absence of such an arrangement , there is
a strong possibility that SBF would be liquidated in order to
pay the bondholders .
ABS will continue to guarantee the payment of the bonds .
Please place this matter on the Common Council' s calendar
for its December 16 , 1985 , meeting.
Thank you for your attention and consideration of this
matter.
Very tr ly your- ,
/
Michael C. Murphy 1r
MCM:mm
Enclosure
cc: Mr. Kenneth P. Fedder