The indebted sewer system at the centre of Alabama's Jefferson County's bankruptcy is drawing early interest from Wall Street firms and could be bought once it sheds its debt burden, an investor whose company runs the pension fund of state employees said.
David Bronner, the CEO of the $29 billion Retirement Systems of Alabama, said several Wall Street firms called him to inquire about buying the system, one day after the county filed for bankruptcy in the biggest municipal bankruptcy in US history. They called Bronner seeking advice given his expertise in the system's finances, he said.
Bronner, who is best known for buying a big stake in US Airways Group and briefly becoming its chairman in 2003, himself talked about buying the sewer system in 2008, only to have his overtures rebuffed by county commissioners. He said the sewer system generates over a $100 million a year in revenue even though it is crippled by a $3.14 billion debt that played a critical role in the decision to file for bankruptcy.
"I have had three or four calls from Wall Street. At this stage, it is investment bankers. They are always looking for a deal," Bronner told Reuters on Thursday. "Anything that goes into bankruptcy that has a large revenue (stream) is attractive (and) if you remove the debt it is a viable institution," he said.
Jefferson County's decision to file for bankruptcy on Wednesday followed a three-and-a-half year struggle to avoid filing for Chapter 9. The decision, which came just when a final deal with creditors looked close, took most observers by surprise but commissioners said they concluded they would never reach a satisfactory deal. One senior county official rated the sewer system's assets at around $2 billion, despite its debts, and argued that it could be a good buy at anything less than $1.6 billion. The system is not currently up for sale.