A high-priced, complex legal dispute affecting 2,600 St. Paul Port Authority bondholders ended quietly Thursday in a Ramsey County courtroom with just a handful of observers.
Judge Robert Awsumb announced his approval of a settlement, ending years of legal wrangling and appeals. The judge noted that as a St. Paul resident himself he considers the pact to be "fair, reasonable and adequate" for city taxpayers, the Port Authority and bondholders.
Awsumb said the settlement "eliminates substantial risk" of loss for all parties, including the potential "of tapping the taxpayers."
As part of the settlement, the Port Authority will release $22 million in escrow, half of which will be used to pay past and current interest to the bondholders up to Dec. 1.
Bondholders will receive 20 cents on the dollar in interest for their holdings, said attorney Keith Broady, who represented them. So the holder of $5,000 in bonds would receive $1,000.
The judge has yet to rule on payment of attorneys fees, but Broady, of the Lommen Abdo law firm in Minneapolis, is asking for $2.2 million, which would come from the escrow.
The next step is a Dutch auction in January at which bondholders who wish to unload their investments can do so at a discounted rate. Of the $22 million in escrow, $10 million would be used to buy back bonds at a discounted rate from bondholders who want to sell now rather than collect interest payments.
Of the initial bond sale, bondholders still hold $51 million in principal, but the auction will substantially reduce that amount.
