Published: October 23, 2009
Fitch Downgrades Yavapai Co., AZ IDA Excise Tax Bonds to 'D'
AUSTIN, Texas - (BUSINESS WIRE) - Fitch Ratings has downgraded to 'D' from 'B' the rating on the $35
million convention center facilities excise tax revenue bonds, series
2005 (taxable) of the Industrial Development Authority (IDA) of the
County of Yavapai, Arizona. Fitch originally assigned an 'A-' rating to
the bonds on Nov. 1, 2005, and subsequently downgraded the bonds to 'B'
on May 30, 2008. Bond proceeds were used to construct a 5,000-seat
convention and events center in Prescott Valley.
The 'D' rating indicates failure to make payment of principal and/or
interest under the contractual terms of the rated obligation. Fitch will
maintain this rating for 30 days, at which time Fitch may withdraw the
rating if there has been no change in the payment status on the bonds.
Fitch takes this action in response to non-payment of interest due to
investors on Oct. 1, 2009, as reported by Well Fargo Bank, NA serving as
trustee. The trustee did not make the payment despite the fact that
sufficient funds had been transmitted. The trustee took this action at
the direction of the majority bondholder, Allstate Life Insurance
Company, so that counsel for the bondholders and the trustee can use
these funds to pursue legal action related to the series 2005 offering.
Allstate, Wells Fargo, and the retail bondholders have filed separate
lawsuits against the various parties associated with the series 2005
bonds (including the authority, the Town of Prescott Valley, the project
developers and legal and financial consultants), charging, among other
things, misrepresentation and failure to disclose material facts
regarding the feasibility of the project.
On May 30, 2008 Fitch downgraded the series 2005 bonds to 'B' from 'A-'
as a result of a technical default. Prescott Valley Events Center LLC
(the borrower) did not transmit funds required for the Oct. 1, 2007 debt
service payment on the bonds. The trustee then drew upon the debt
service reserve fund in the amount of $1.17 million to make the required
payment. The trustee reported these events to bondholders, along with
the borrower's reported failure regarding other obligations. According
to the trustee, sufficient funds were transferred for the April 1, 2008,
Oct. 1, 2008 and April 1, 2009 debt service payment on the bonds.
However, the debt service reserve fund has not been replenished.
Additional information is available at 'www.fitchratings.com'.
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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE.
Fitch Ratings
Steve Murray, +1-512-215-3729 (Austin)
Jose
Acosta, +1-512-215-3726 (Austin)
Media Relations:
Cindy
Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com
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