Las Vegas Monorail defaults on bonds, interest payments in jeopardy

By Caroline Salls

Pittsburgh, April 14 - Las Vegas Monorail Co. is in default on its project revenue bonds, third-tier series 2000, in connection with its failure to fund and replenish debt service reserve funds, according to a notice sent to bondholders by trustee Wells Fargo Bank, NA.

According to the notice, Las Vegas Monorail has failed to fund the debt service in amounts sufficient to pay interest and principal on the senior bonds as they come due.

Specifically, the trustee said it was forced to withdraw funds from the first-tier and second-tier reserve funds to make up the debt service funds deficiency on Jan. 2, 2008, July 1, 2008 and Jan. 1, 2009.

Wells Fargo said no revenues have been available to replenish the first-tier or second-tier reserve fund or to fund the second-tier reserve.

On July 1, $9.63 million in interest is due on the first-tier bonds and $5.49 million in interest is due on the second-tier bonds, according to the notice.

The trustee said there is $1.95 million in a related revenue fund, $525,134 in a first-tier debt service account, $3.7 million in the first-tier debt service reserve, zero in the second-tier debt service account, $3.3 million in the second-tier reserve, $1.09 million in an indemnification account, $3.4 million in a construction account and $7.89 million in a removal cost escrow.

As a result, Wells Fargo said the first-tier and second-tier reserve funds do not have enough funds available to make the entire July 1 interest payments, and there will continue to be a shortfall if Las Vegas Monorail does not fully fund the debt service on the first-tier and second-tier bonds.

The trustee said it would be forced to make a demand on first-tier bond insurer Ambac Assurance Corp. if there are not enough funds in the first-tier debt service account on July 1. If there are still not enough funds in the second-tier reserve, a payment default will occur on those bonds, Wells Fargo said.

Nevada's Department of Business and Industry loaned the proceeds of the bonds to Las Vegas Monorail on Sept. 1, 2000.

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