(Source: Mark Stryker Detroit Free Press (MCT) — Michigan Opera Theatre officials are breathing easier after the bank consortium that holds its $18-million debt agreed to shift its deadline for payment from May 31 to June 30.
MOT announced a do-or-die fund-raising campaign this spring to retire the debt that threatens to push the company into bankruptcy. Headed by Chase, the banks had agreed to accept $11 million to pay off the bond debt — provided the money arrived by May 31.
MOT general director David DiChiera said the company asked for an extension to give several local foundations — which don’t hold their quarterly meetings until June — the opportunity to contribute. MOT needs to raise a minimum of $8 million. Company officials say they can borrow as much as $3 million to reach the $11-million goal.
MOT now has an extra 30 days to reach the finish line. “We have a one-month grace period,” said DiChiera.
MOT recently hit the $6-million mark. DiChiera said he was optimistic the company would find at least another $2 million. Still, he cautioned that the last money in a campaign was always the most difficult to raise, and that even if the foundations come through in June, additional corporate and individual gifts were needed to get to $8 million.
“It’s relentless,” DiChiera said.
Most of MOT’s debt is related to the parking garage it opened in 2004, with some money also owed on the theater. MOT has struggled under the burden of the debt, cutting more than 20% of its operating budget in recent years by eliminating productions, laying off staff and other measures. With no endowment reserves, monthly cash flow has been harrowing.
Since 2009, MOT and its banks have been operating under an agreement that reduced annual bond payments from about $2.5 million to $1.3 million. But with a final extension of the deal coming to a close this spring, MOT was forced to launch an urgent fund-raising drive.
MOT officials have said the company has shown it can sustain a $10-million annual budget on fund-raising, ticket sales and other earned revenue and that retiring the debt will solve the structural problem with its budget once and for all.
Contact Mark Stryker: 313-222-6459 or mstryker@freepress.com
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Source: Mark Stryker Detroit Free Press (MCT)
