(Bloomberg) — Detroit won a commitment from Barclays Plc for $275 million in financing to fund the city's exit from its landmark bankruptcy, if a judge approves its debt- cutting plans at a trial slated to start next week.
Detroit, which filed the biggest U.S. municipal bankruptcy in history last year, is seeking court approval to eliminate more than $7 billion of its $18 billion in obligations to retired city workers, bondholders and other creditors.
The money from London-based Barclays would be used to pay off $120 million Detroit borrowed to help fund reorganization, pay some creditors and revitalize the city. The tax exempt bonds to be issued as part of the financing will pay an interest rate equal to a municipal swap index, plus 4.25 percent, said Bill Nowling, a spokesman for city emergency manager Kevyn Orr. The taxable bonds will be based on Libor, pluse 4.75 percent.
"We are very pleased to have secured this exit facility and are encouraged by the reception we received from the broader financial community," Orr said in a statement.
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