As widely expected, the bonds that built Los Angeles Theatre Center have gone into default.
A $388,000 payment on the bonds, due Saturday, was not paid by the investment trust that owns the building, and Security Pacific Bank issued a notice of default Monday. The bank is the trustee on the bonds, technically certificates of participation.
Nearly $4.7 million in principal remains to be paid on the $4.8-million bonds, which were issued at 12.75% interest in 1982.
If no payment is received after a 10-day grace period, foreclosure proceedings will begin, said Keith Marshall, a Security Pacific vice president.
Foreclosure could take four months. In the meantime, Marshall hopes the city of Los Angeles will take steps to acquire the building and pay off the bondholders, he said. This course has reportedly been recommended by a commission, appointed by Mayor Tom Bradley, that has studied the future of the building. The board of the city's Community Redevelopment Agency, which has traditionally made the payments on the bonds, also endorsed a city takeover at a Dec. 6 meeting.
The default notice acknowledged the CRA board's action and said the bank and the agency will discuss the board's proposal "over the next few weeks." Another report to the bondholders will probably be made on or before Jan. 15, according to the notice.
In addition to the principal and accrued interest, the expenses of default will also be added to the debt. Those expenses are now less than $20,000, said Marshall, "but as I employ lawyers, it grows."