Monticello Update on Municipal Fiber Network and Bonds

Late last week, I ran across an article in WatchDog that reported on issues with Monticello FiberNet. The article focused on the reaction of bondholders outside of Minnesota to their investment. This week I’ve heard from folks in Monticello.

Earlier this month the Monticello city council approved a “term sheet” providing a road map for addressing default on the  revenue bond. This term sheet was developed through negotiations with the attorney and will be presented to bondholders to accept as Class Action or not.

The plan today is for the city to continue to operate the system for the foreseeable future.

Here are excerpts from the Term Sheet for Settlement

The City, the Trustee, and Bondholders’ Counsel agree to the Settlement: settlement amount covering all claims and obligations arising out of or under the Indenture, contingent on, among other things, approval by the Directing Holders of the settlement described below.

Directing Holders will agree in the Class Action to release all claims against the City arising from the City’s actions and inaction related to the Bonds, including but not limited to claims arising under the Indenture, claims arising under federal and state securities laws, common law fraud and misrepresentation claims, and any claims inlaw or equity, known or unknown at this time, which were asserted or could have been asserted at any time against the City based, directly or indirectly, upon the Bonds.

Directing Holders will also agree in the Class Action to release all claims, if any, against the Trustee relating to the Bonds and the Indenture, and any claims in law or equity, known or unknown at this time, which were asserted or could have been asserted at any time against the City based, directly or indirectly, upon the Bonds or the Indenture.

The Trustee will release the City from its liens and all obligations respecting the Indenture and the Bonds as described below in the heading “Trust Instruction Proceeding”).

(i) The City agrees to pay into a settlement fund for distribution to the Directing Holders and payment of attorneys’ fees and other expenses of Bondholders’ Counsel a single payment of $5,750,000 (“Settlement Amount”) no later than one hundred days after the later of (i) the date that a final, nonappealable order is entered in the Class Action (“Class Action Order”), or (ii) the date that a final, nonappealable order is entered in the TIP.

(ii) The parties agree that, as part of the settlement, the City will cede its interest, if any, in any funds remaining in the trust funds held under the Indenture (the “Trust Funds”).’ The Trustee will be authorized to distribute the Trust Funds to all holders of the Bonds as of a special record date to be established under the Indenture following the approval of the Settlement by the court in the Class Action and immediately following the approval of the Settlement by the TIP Court, reserving therefrom all then unpaid Trustee’s fees, costs and expenses, including attorneys’ and other professional advisors’ fees. The distribution shall be made as required by the Indenture.

This entry was posted in Community Networks, MN by Ann Treacy. Bookmark the permalink.

About Ann Treacy

Librarian who follows rural broadband in MN and good uses of new technology (blandinonbroadband.org), hosts a radio show on MN music (mostlyminnesota.com), supports people experiencing homelessness in Minnesota (elimstrongtowershelters.org) and helps with social justice issues through Women’s March MN.

1 thought on “Monticello Update on Municipal Fiber Network and Bonds

  1. Ann, I read on the watchdog site that the city had borrowed $25 million. Any idea how much is in the trust fund account. Without the trust fund proceeds, the city is paying only 25 cents on the dollar. Ouch!

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