Debt Problems
On April 3, 2010 it was reported that Fitch Rating Agency had downgraded the bonds used to finance the new arena to "junk" status and further warned the arena's debt holders that in as soon as 30 months the new Amway Center could be faced with a default unless finances are corrected. The city and county were quick to assure local media that in no way would Fitch's downgrade delay construction and that all necessary funds were on hand to complete the center. However because of the Fitch downgrade the interest rate on the debt payments would increase the "payoff" cost of the Amway Center over time and the Orlando Sentinel pointed out that it would be harder to seek lending for the other phases of the project such as the "$425 million Dr. Phillips Center for the Performing Arts and the $175 million renovation of the Florida Citrus Bowl stadium."
The downgrade to "junk" of the Amway Center's debt—although reversible—signals that unless local government either expands tax revenue or drastically reduces both Amway Center and non-center expenses, creditors could in just a short few years seek bankruptcy relief in the form of repossession or auctioning off the new center. Such a move would probably not threaten the Magic's status as tenant in the venue.
Read more about this topic: Amway Center
Famous quotes containing the words debt and/or problems:
“Man’s pity for himself, or for his son,
Always premising that said son at college
Has not contracted much more debt than knowledge.”
—George Gordon Noel Byron (1788–1824)
“As our disorderly, competitive technological society is piling up its victims and constantly developing new problems of maladjustment, we must use our scientific knowledge to determine the cause and prevention of suffering rather than putting all our emphasis on its alleviation ...”
—Agnes E. Meyer (1887–1970)