Bondholders for the contractor consortium building the Skylink People Mover project at Los Angeles International Airport have granted a two-month reprieve on a deadline that could have resulted in a technical default.
The move gives the contractor team two additional months to complete final-stage testing on the much-delayed project.
Bondholders have agreed to waive the Oct. 8 “lenders’ longstop date,” merging that date into the Dec. 8 “project longstop date,” Bond Buyer reported, citing a filing from the contractor consortium known as LAX Integrated Express Solutions or LINXS.
The lenders’ longstop date is the deadline for the contractor team to achieve certain conditions in the agreement with bondholders or face technical default that could result in halting of further payments from lenders. The project longstop date is the deadline by which the project is deemed 100% complete – in this case, ready to take on passengers.
The $3.34 billion Skylink project is designed to provide an alternative to using the often-congested central terminal loop to pick up and drop off air passengers. It has six stations: three in the central terminal area, one next to the economy parking lot and ground transportation center, a station that connects to the Metro C and K line trains and the final station at the consolidated rent-a-car facility near the 405 Freeway.
Stuck at near completion
The project has been stuck at just over 99% complete for months as a dispute between LINXS and Los Angeles World Airports has festered, resulting in litigation. The dispute centers around repairs to electrical monitoring equipment. More recently, LINXS has had difficulty obtaining an interconnection agreement with the Los Angeles Department of Water and Power.
The filing of the lawsuit in July led Fitch Rating Service to downgrade LINXS bonds further into speculative or junk bond territory – to a BB rating from a BB+ rating.
The extra 60 days that bondholders have granted is intended to give LINXS more time to complete system testing. Before a certificate of operation can be granted, the train system must undergo 30 days of continuous, problem-free testing. Given all the disputes, there would have been insufficient time to complete that testing prior to the Oct. 8 lenders’ longstop date.
