What makes an orchestra an orchestra is the emphasis on the strings.
But, for a moment, let’s admire the Nashville Symphony’s brass.
Last week, the symphony’s board sent a letter announcing it would not renew a letter of credit with Bank of America. In response, Regions called the bonds backed by the letter of credit. Under the terms of the still-extant agreement with Bank of America, the bank will be responsible for buying those bonds — an expense of nearly $90 million.
That’s pretty dry stuff to the layman, but in the world of corporate finance, that’s as shocking as hearing for the first time the 16 cannon shots Tchaikovsky wrote into the “1812 Overture.”
In essence, the board put Bank of America on the hook for a substantial amount of debt related to the construction and upkeep of its dazzling SoBro facility.
It came, according to the letter, after protracted negotiations in which the symphony attempted to renegotiate with the banks a plan for paying off its debt, seeking to make stable, predictable, regular payments.
The banks, it seems, were not amenable.
Even in the shallowest reading, forcing Bank of America’s hand was a bold move and sets a clear deadline for something to be worked out.
But a deeper dig reveals that the symphony board was as daring as the debut performance of The Rite of Spring.
Conveniently, the symphony announced its 2013-14 season just days after it announced its financial power play, the highlights of which are performances by middle-of-the-road favorites like Chicago and Kenny Loggins as part of the (wait for it) Bank of America Pops Series.
The bank that the symphony is forcing to tote the note is allowing its name to be used to tout the notes.
Furthermore, the symphony’s board of directors — at 67 members, the city’s most outsized leadership group not named The Metropolitan Council of Nashville & Davidson County — has been chockablock with serious business types who normally look down on playing chicken with bankers. The amount of bank support in building and sustaining the symphony has been substantial.
This isn’t biting the hand that feeds you; this biting the hands of the entire staff of celebrity chefs you hired to put together the 14-course dinner and smiling like Alfred E. Neuman the whole time.
In essence, the executives at the symphony said to its lenders, “Thanks for bankrolling our lavish building, our acclaimed pop series and lending your talents and limited free time to our governance. If you’d please be so kind as to stand still, we are now going to sucker-punch you.”
It’s likely the symphony’s gamble will pay off. What they are seeking — a stable, regular method of paying down the debt — is a reasonable request that, for whatever reason, had it at loggerheads with its lender. Furthermore, Bank of America has little interest in spending its money on paying off bonds.
A deal will be struck, announced no doubt at a well-orchestrated press conference, with smiling symphony directors and bank executives aplenty.
And in a lot of cases, it’ll be the same people.