Negotiations Stall Between Metro and Belgian Bank

Metro and a Belgian bank seeking to collect $43 million from the transit agency were unable to reach a settlement today despite two days of talks. The two sides are scheduled to reappear before U.S. District Judge Rosemary M. Collyer tomorrow.

KBC Group is seeking immediate payment because its longterm financing deal with Metro soured when the credit rating of troubled insurance giant, American Insurance Group, was recently downgraded. That downgrade put the deal in default and allowed the bank to seek payment because AIG had guaranteed the agreement between KBC and Metro.

Metro spokeswoman Candace Smith said it was a good sign that the two sides were still negotiating.

Metro's case is being closely watched by transit agencies and other public entities in the United States and Europe because those entities entered into hundreds of similar financing deals that are also in jeopardy because of the downgrading of guarantors in those transactions.

Metro is asking the judge to temporarily bar KBC from collecting payment. The judge has suggested a compromise that would give the bank some money without financially crippling Metro.