By Joseph Lichterman
DETROIT, Nov 14 (Reuters) - Detroit must disclose the feestructure of a $350 million debtor-in-possession financingagreement, U.S. Bankruptcy Judge Steven Rhodes said Thursday,turning back the city's efforts to keep secret the cost oflanding a controversial loan package.
The city and Barclays Capital had requested the fees be kepta secret because the details are commercially sensitive andmight raise the price of the loan.
Detroit reached the loan agreement with Barclays, a unit ofBritain's Barclay's Plc, in October, but the deal stillmust be approved by Judge Rhodes. About $230 million of theproceeds would be used to end interest-rate swaps contracts thatthe city has with Bank of America Corp's Merrill LynchCapital Services and UBS AG. The swaps were related todebt sold in an effort to help Detroit make payments into citypension funds.
About $120 million of the DIP financing would be used toimprove city services. The financing would be largely securedwith a pledge of Detroit's income tax and casino tax revenue.Bond insurers and others have objected to Detroit's proposal topay off its swap counterparties ahead of other creditors.
Detroit's unions, pension systems, bond insurers and othersalso objected to the Barclays fee letter being filed under seal.Rhodes, who is overseeing the historic municipal bankruptcy caseDetroit filed in July, has scheduled a hearing beginning Dec. 10to decide whether or not to approve the loan.