Unlocking the Ball and Chain of an Upside-Down Swap Contract
Winter Park, Fla—March 16, 2011—Swap Negotiators, an advocate for commercial borrowers, today announced the successful modification of the existing interest rate swap for the South Florida Gastroenterology Associates, P.A. (SFGA) Ambulatory Surgery Center in Delray, FL.
SFGA is a 16-physician gastroenterology practice based in Boynton Beach, Florida. It has six offices – three in Boynton Beach, one in Delray Beach, Atlantis, and in Wellington, FL. SFGA’s Outpatient Center of Delray Beach, along with another ASC in Boynton Beach, are state of the art ambulatory surgery centers for GI procedures performed by SFGA. The Delray Beach ASC also houses Delray Imaging Associates; a physician-owned imaging center.
Upside-Down Swap Contract
SFGA fixed the rate on a building loan several years ago with an interest rate swap. Recently, the swap had 16 years remaining with a substantial unwind penalty that would have prevented a new financing. The bank which hoped to be the new credit provider could not accept the swap with a term of more than 10 years. Swap Negotiators solved the problem by restructuring the swap so that the last 6 years were unwound at a modest fee and then assigning the remaining 10-year swap to the new credit provider.
“Swaps with negative values, as in the case of an upside-down swap, have been a ball and chain for many borrowers lately. Often, even the banker is at a loss over how to handle the swap, and the bank must walk away from a borrower it would love to bank. In today’s challenging credit environment, it’s unfortunate that upside-down swaps are adding an extra hurdle to the loan process,” said Greg Warren, managing partner at Swap Negotiators. “It doesn’t have to be this way. We are pleased to have successfully executed a swap modification structure so SFGA could take advantage of an excellent financing offer from a new bank. Without a solution to their swap problem, they would have been unable to switch banks.”
Swap Negotiators represents clients across the U.S. to navigate the complex process of entering, negotiating and unwinding interest rate swaps to ensure the best outcome for the borrower.
About Swap Negotiators
Swap Negotiators is a highly specialized group that provides advocacy and expertise exclusively for commercial borrowers. Swap Negotiators publishes a monthly report of average hidden and undisclosed bank fees paid by commercial borrowers. Located in central Florida, Swap Negotiators provides advice on interest rate swap contracts for commercial borrowers and works in partnership with banks to provide transparent pricing, valuations and ongoing support for the life of a swap. Additional information about Swap Negotiators can be obtained by calling (407) 264-7264 or by visiting www.swapnegotiators.com.
Phone: (407) 264-7264