By Melinda Dickinson
BIRMINGHAM, Ala., Feb 14 (Reuters) - Officials in Alabama's
bankrupt Jefferson County approved a deal on Thursday with
European Depfa Bank Plc to cut interest charges on about $162
million of the county's school debt.
Although the "plan support agreement" saves only about $1
million a year for the county, which in 2011 filed a $4.23
billion municipal bankruptcy, the resolution passed by the
Jefferson County Commission said the deal would bolster the
county in talks to hammer out a broader adjustment plan with its
Wall Street creditors.
Home to Birmingham, Alabama's biggest city, Jefferson County
was primarily driven into what is the biggest bankruptcy ever
by a U.S. local government by massive sewer system debt now
estimated at $3.2 billion.
Some creditors and county officials are meeting privately to
work out a possible plan likely to require reductions in
interest rates and other concessions by creditors such as
JPMorgan Chase & Co. The plan is needed for Jefferson County to
exit bankruptcy protection. The county filed for bankruptcy in
November 2011.
Jefferson County said the Depfa debt was among its costliest
and had carried an interest rate of 3 percent over Libor since a
2009 default. Jefferson County Manager Tony Petelos said the new
rate was 75 basis points lower.
In addition, he said, the county agreed to repay its Depfa
debt faster than scheduled, including an accelerated payment of
$20 million this year.
A representative of Depfa, based in Dublin but supervised
and supported by the German government, did not immediately
respond to an inquiry for comment on the agreement.
Separately, Jefferson County won dismissal on Thursday of a
lawsuit by Birmingham's city government against the closure on
Dec. 31 of in-patient care at Cooper Green Mercy Hospital.
As part of severe cost cutting, which has seen current
fiscal year spending shrivel by $107 million to $205 million,
county officials eliminated in-patient care at Cooper Green used
mostly by poor people in Birmingham.
(Additional reporting by Michael Connor)
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