Detroit Gets $350 Million Loan
October 11th, 2013, 4:16 PM
Detroit is now another $350 million in debt.
There's some convoluted good news in this, though, according to the Free Press. Part of the $350 million loan from investment bank Barclays will be used to pay off a different debt that is probably worse for the city.
To get the secured debt commitment, the city is pledging a combination of its income tax revenue, casino tax revenue and the “proceeds from any potential monetization of city assets that exceeds $10 million,” officials said in a press release.
The city will use about $230 million from the new financing, which carries a minimum interest rate of 3.5%, to pay off the swaps held by UBS and Bank of America Merrill Lynch.
The rest of the cash will be used to reduce blight, invest in police and fire protection and technology infrastructure, the city said. It will also be used to “improve the future recoveries of its creditors, including retirees, as part of its restructuring process,” the city said in a news release.
The load still needs to be approved by U.S. Bankruptcy Judge Steven Rhodes.