"The authority was attempting to renegotiate terms of a complex financial deal with the banking giant UBS. Known as a swaption, the arrangement could force the authority to pay out a $450 million lump sum"
Please see: You Can Pay Me Now AND Pay Me Later
"Turnpike may face $400m payment" by Noah Bierman, Globe Staff | January 10, 2009
Swiss financial giant UBS took a crucial step this week toward forcing the Massachusetts Turnpike Authority to hand over nearly $400 million to pay off a risky investment that turned sour.
That's TAXPAYER DOUGH, folks!
The agency is disputing the basis of the company's demand, which could lead to a court battle if the sides cannot reach agreement.
And if it goes to court, guess who pays for the state's lawyers to try the case.
Authority executive director Alan LeBovidge said he was surprised by a letter he received from UBS this week but does not believe the turnpike is in imminent danger of having to pay the lump sum.
"They just kind of called and said, 'Red Rover, Red Rover, We're sending a letter right over,' " LeBovidge said.
WTF is with this guy? This ain't some sort of kindergartner's game, jerk-off!!!!
The letter from UBS, sent midweek, puts the authority on notice that it has 30 days to fix a credit problem or it will owe UBS a lump-sum payment to settle a complex investment the two parties agreed on in 2001. UBS spokesman Doug Morris declined to comment last night.
The notice comes as the authority is struggling with financial problems that have triggered a large and unpopular toll increase, now under debate. As of Monday, the value of the potential payment to UBS was $397 million, LeBovidge said, but it fluctuates depending on the financial markets. For several years, the authority has regretted the UBS deal, and others like it, entered into by previous administrations.
Yup, but AT THE TIME -- like with the bailout bills and the wars, etc, etc, etc -- we were told it was a GREAT IDEA!!! Any critics were scolded and shunned!
The UBS deal earned the agency about $29 million in immediate cash to pay Big Dig debts, but came with great risk: a large lump-sum termination fee that has grown with the credit crisis. Critics of the agency have seized on it as an example of poor choices that have pushed the authority into a state of financial peril.
We are never going to get out from under the Big Pit -- and maybe that was the plan, "eh?
"This is just the start of a long process," LeBovidge said. "The turnpike doesn't have $397 million to give them. I've got a lot of bridges I could sell them."
Ha-ha-ha, not funny!
LeBovidge said the authority and its lawyers believe UBS does not yet have the contractual right to send the letter because a set of financial triggers have not been met.
The central dispute is over the turnpike authority's insurer, Ambac Financial Group Inc., whose credit rating has been sinking. Under the terms of the contract, the lump-sum termination payment could be triggered if this rating gets too low - a condition that UBS said has been met. The authority believes, however, that Ambac's rating from one of two national credit agencies would need to drop another notch before UBS can request payment.
Yeah, and next week the trigger will be met. Look at the asshole state managers quibbling over it.
But even if UBS is correct in its interpretation, the contract gives the authority 30 days to find an alternate source of credit backing. Authority lawyers have been working with UBS to accept a measure passed by the Legislature last year that guarantees the debt using the Commonwealth's credit.
And that means YOU KNOW WHO doing the GUARANTEEING, taxpayers!!!
But that has complications. The state law extending credit to the Turnpike Authority expires Thursday, meaning the Legislature may have to pass an extension, LeBovidge said.
"I think that one way or another, this situation will be resolved favorably," said Mary Z. Connaughton, a turnpike board member. But she said Governor Deval Patrick's administration should have worked more quickly to resolve the issue. "It shouldn't come up at the eleventh hour."
Yeah, well, he's been so disappointing that that's not really a disappointment; it is to be expected!
The complexity of the deal with UBS has helped keep the deal mysterious to the public.
That's a newspaper's job, yup.
It involved a lump sum payment made to the authority in 2001. In exchange, the authority agreed to swap interest rates with UBS on debt payments. The authority expected deals with other banks would act as a balance, preventing the authority from losing money. But the international credit crisis shattered those expectations.
Yeah, those swap deals are no good from what I've seen on the blogs.
Beginning this month, the authority has had to pay UBS $2.2 million per month under terms of the contract. Last month, LeBovidge was able to settle a separate deal made with the former Lehman Brothers by paying the bank's receivers $3.4 million.
Oh, so we are ALREADY SHOVELING a cool $2 MILLION a month at UBS! Not like we need that money for anything here, right, Mass. citizens?
"I'd like not to have this cloud hanging over the turnpike's head," LeBovidge said. "We're going to deal with it, like we deal with all the other issues."
Translation: We will RAISE TAXES, TOLLS, FEES, and whatever the hell else we need to to pay off our bad decisions! Fuck you, taxpayers!
