By Emerson Drake
Monday night 4/23 at the City’s Finance Committee meeting we learned the city had contacted 25-30 banks (their numbers not mine) to inquire which among them would be interested in renewing Modesto’s revolving letter of credit which expires September 30, 2012.
Only four banks showed any interest in doing business with us. And only one actually made an offer and it wasn’t what we were looking for.
Our current letter of credit is with Bank of America and BofA wanted to change it over to an out right loan.
Modesto is looking at a $63,000,000 letter of credit and so far there are no takers.
As it stands right now we will have to pony up $12.5 Million to terminate the letter of credit in September if some sort of accommodations aren’t made.
Should we be concerned that only four banks would even return our calls and only one would make any kind of solid counter offer and not just a “maybe” IF they can find someone else willing to split our debt with?
And does it matter that two of those are European banks ( based in France and Belgium) we know how unstable the EU is now and the remaining bank is Bank of the West.
In times past you might have had the chance to learn about this from other sources but we were the only ones there.