Trustee: Trump Golf bond payments likely to come from letter of credit

By Caroline Salls

Pittsburgh, July 20 – Coco Beach Golf & Country Club, SE revenue refunding bond trustee Banco Popular de Puerto Rico said in a notice released Monday that the sole source of payment on the bonds after the company’s proposed sale and plan approval will come from a Puerto Rico Tourism Development Fund (TDF) letter of credit.

The trustee said it is likely that if the sale is approved and a plan of reorganization if ultimately confirmed, any deficiency claim due to TDF and the bondholders from Coco Beach would receive a nominal distribution, if any.

Banco Popular said any sale completed under the company’s proposed procedures will result in cancellation of the mortgages over the Coco Beach assets that secure the obligations to TDF and the bondholders. Unless paid the value of the Coco Beach assets at the closing of the sale, the trustee said any liens would attach to the sale proceeds.

According to the notice, Coco Beach stopped making payments of principal and interest on its $26.36 million of Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority 2011 series A tourism revenue refunding bonds tied to its Trump International Golf Club Puerto Rico project on Sept. 17, 2011.

Since that date, payments of principal and interest on the bonds have been made by TDF under its letter of credit. On July 15, in accordance with its obligations under the letter of credit, TDF deposited with Banco Popular the amount of $1.13 million, which represents the principal and interest due on the bonds through Dec. 20.

To date, TDF has paid $8.22 million to the trustee under its letter of credit.

In addition, Banco Popular said the company’s bankruptcy filing constituted an event of default under the bond trust agreement.

Under the trust agreement, as long as TDF is in compliance with its obligations under the letter of credit and specified events of insolvency not have occurred, the trustee may not seek any remedy related to the bonds without the consent of TDF.

As previously reported, Coco Beach’s real property consists of the Trump International Golf Club at Coco Beach at Zarzal Ward, Rio Grande, Puerto Rico. The club operates as the Trump International Gulf Club Puerto Rico.

Coco Beach Golf, a San Juan-based golf club, filed for bankruptcy on July 13 in the U.S. Bankruptcy Court for the District of Puerto Rico. The Chapter 11 case number is 15-05312.

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