(Bloomberg) -- Holders of $287 million of municipal bonds sold to help finance the construction of the American Dream mega-mall in New Jersey’s Meadowlands are poised to receive overdue interest next week after two years of missed payments. The unrated bonds, which are backed by New Jersey economic development grants, skipped payments after documentation necessary to appropriate the funds ran into hurdles. New Jersey officials needed to certify a project cost statement and the state Treasury had to calculate the grant amount.
The grant funds are tied to tax revenue derived from sales at the mall, which saw double-digit year-over-year increases the past two quarters. US Bank — the trustee on the debt — has been unable to make semi-annual interest or redemption payments since August 2022. As of Aug.
1, the past-due interest totaled $46.4 million, and it must complete those payments before paying down principal, according to a securities filing dated Friday. On Sept.
3, US Bank will deliver about $25.7 million to holders for past-due interest, the filing said. However, after the distribution “no excess amounts thereafter remained to make any deposit of monies into the Mandatory Redemption Account for the redemption of principal.
” A missed payment doesn’t constitute an event of default, according to bond documents. US Bank declined to comment. A spokesperson for American Dream didn’t respond to an emailed request for comment.
A representative for the New Jersey Econ.