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Millennium debt deepens |
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Posted by busfreak99 on Sun Aug 23 12:55:19 2009 Millennium debt deepensCid Standifer Record Staff Writer Millennium Transit Services LLC, a bus company that went bust in 2008 after borrowing $4,320,000 from the New Mexico State Investment Council, Roswell's Urban Development Action Grant Revolving Loan Fund, and Pioneer Bank (known together as the Pioneer Bank Group), is staying current on interest payments, but sinking deeper into debt. According to Roswell Finance Director Larry Fry, little more of the principal amount of the Bank Group loan has been paid back since Millennium filed bankruptcy. Around that time, Millennium still owed the Pioneer Bank Group $3,065,687.47. However, the court has ordered Millennium to keep up with interest payments, and both Fry and Charles Wollman of the State Investment Council say Millennium has made good on that promise. In June, Millennium filed a motion in bankruptcy court asking for permission take out a sixth debtor-in-possession loan for $372,573, bringing the total of DIP loans to almost $2 million. DIP loans are designed to let a company keep functioning and ideally get back on its feet during the bankruptcy process. The parties who loaned the company money before it declared bankruptcy usually have a chance to weigh in on whether the DIP loan should be approved, and may be amenable to new loans if they think it will help the company recover and repay the rest of its debts. Repayment of the DIP loans will take precedent over all of the unsecured lenders - i.e., lenders whose loans are not backed by collateral - but the Pioneer Bank Group's liens on Millennium's property will still be at the top of the priority list. The lender in all the DIP loans is James Ludvik, Millennium's major stockholder. At the time Millennium filed for Chapter 11, the Colorado businessman was listed as the company's largest unsecured creditor with a stake of $16 million. The company's request for a sixth DIP loan argues that Millennium has no other way to keep financing its business and stabilize the company. Millennium's attorneys said the company is looking for bus manufacturing contracts to make Millennium profitable again, outside financing, or a buyer for its assets. In July, Wagner Equipment Co. filed an objection to the latest DIP loan that painted a bleak picture of Millennium's future. When Millennium filed bankruptcy, Wagner Power Systems, a branch of Wagner Equipment, was Millennium's third-largest unsecured creditor. Millennium owed Wagner $566,390. The objection pointed out that no clients have ordered buses from Millennium since the company filed for Chapter 11 bankruptcy a year ago. "As it stands, the 'going concern' of the business appears to be ongoing idleness and increase its already significant liabilities," stated the objection. According to operations reports Millennium filed for the month of July, most of the company's expenses are for payroll, insurance, taxes, and interest paid to Pioneer Bank. The lion's share of the company's income was through a DIP line of credit. Wagner's attorneys questioned the likelihood of any salvation for the company. "Beyond mere speculation, such as an unnamed Nigerian entity and even the U.S. Government's Troubled Asset Relief Program (TARP), no such savior has come forth," said the filing. "Given the lack of any showing that fruitful business prospects or intervenors are reasonably within the grasp of the Debtor, the approval of the Sixth DIP Loan is simply throwing bad money after bad money, to the detriment of all creditors in this case." Wagner's counsel also complained that another loan from Ludvik, a company insider, would squeeze out other creditors hoping to minimize their losses. Ludvik did not return a call seeking comment. The court has not made a decision on whether to allow the loan. City and state officials are more optimistic about Millennium's future. "They continue to put money into it in order to make the payments, so I think they continue to hope it'll all be worked out," said Fry. Wollman agreed. "I think it's a good sign that we continue to receive payments from them," he said. Clarke Coll, the attorney representing the Pioneer Bank Group in the bankruptcy case, declined to offer an opinion on whether Millennium may emerge as a viable company. He said that if the company receives a new order at any time, it could be a game-changer. |
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