In a letter sent to patrons this week, the board of the Nashville Symphony announced a bold step in an effort to seek a better long-term debt solution.
"For many years now, the symphony’s debt and bond obligations, which were issued to support construction of our world-class Schermerhorn Symphony Center, have been guaranteed by a letter of credit from a group of national and regional banks," the letter from Board Chairman Ed Goodrich and President Alan Valentine reads.
"On Monday, the Executive Committee of our Board voted not to seek a renewal of that letter of credit when it expires at the end of April, which in practical terms means that the bank group will assume responsibility for the outstanding debt."
Under the terms of a swap agreement included with the bonds issued for the construction of the symphony center in 2004, Bank of America will be responsible for paying the remaining $88.3 million in bonds. Regions Bank already has issued a mandatory repurchase on the bonds for April 1.
The letter — read it in full here — explains that a committee has been negotiating with banks seeking a more traditional and stable long-term lending solution and that the Symphony and its lenders appear to be at an impasse, thus the need for the bold step. In short, Symphony officials are banking on the fact that BofA has no desire to purchase the bonds.
"While it is too soon to know exactly what will happen next, we believe this decisive action will create a sense of urgency and focus in the discussions with our lenders. Our objective is to achieve a comprehensive financial restructuring that significantly reduces or even eliminates the Symphony’s long-term debt, while we continue to take action to manage our costs prudently," the letter explains.