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Thursday
January 29, 2009
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Facilities & Venues

Superdome Authority Sues Merrill Lynch Over $238M Bond Issue

LSED Has Sued Merrill Lynch Over A
$238M Bond Issue For The Superdome
The Louisiana Stadium & Exposition District (LSED) has sued Merrill Lynch over a $238M stadium bond issue that "exploded in interest costs after the market for the bonds dried up last year," according to Alan Sayre of the AP. The suit, filed by the LSED in state court yesterday and in federal courts last week, "claims the authority was led astray by Merrill Lynch over the potential volatility of the auction-rate bonds if not enough buyers could be found." The suit also claims that Merrill Lynch -- "without the authority's knowledge -- was an active participant in sales for auction rate bonds." After Merrill Lynch stopped participating, buyers for the bonds "dried up and the interest rate skyrocketed from about" 4% to 12%, "eventually costing LSED an additional $65,000 per day in interest costs." The bonds involved refinancing of existing Superdome debt, along with $40M for post-Hurricane Katrina improvements and $25M for working capital. The lawsuits "allege violation of federal and state securities laws," and LSED attorney James Swanson said that the suits were filed in both courts to "protect the LSED's ability to sue." Sayre noted under normal procedure, judges "will eventually decide which court will hear the suit" (AP, 1/28).

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