Bank of America Corp. and UBS AG would accept 75 cents on the dollar from Detroit on $343.6 million in swaps liabilities in a deal with Kevyn Orr, the city’s emergency financial manager, according to a person familiar with the negotiations.
As part of the agreement, the city would refinance the remaining debt and would be guaranteed to receive about $11 million a month in casino tax revenue, according to the person, who asked not to be identified because the negotiations are private.
Orr wants to sign the agreement as early as today and continue negotiating with other creditors and employee unions to avoid the largest U.S. municipal bankruptcy, the person said.
Bill Nowling, Orr’s spokesman, didn’t immediately return a phone call and e-mail seeking comment. William Halldin, a spokesman for Charlotte, North Carolina-based Bank of America, and Karina Byrne, a spokeswoman for Zurich-based UBS, were not immediately reachable for comment.
In a June 14 report, Orr proposed paying off $11.5 billion in unsecured debt with $2 billion of newly borrowed money, while he suspended payments on some debt. The plan didn’t include the swaps agreements, which were tied to the city’s issuance of $1.4 billion in pension-obligation certificates in 2005 and 2006.
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