The orchestra asked to pay only the interest on the $9.18 million loan for nine months. The state's Economic Development Authority had to approve the modification to the tax-exempt bond, which it did in exchange for a lien on $366,000 of the orchestra's endowment fund.
Simon Woods, the NSO's president and CEO, said that the deferment was part of a normal and ongoing financial reorganization. "Restructuring debt is something corporations do all the time," he said. "It basically gives us some breathing room for the next six to nine months."
The orchestra has not been in good financial shape since the purchase of the instruments in February 2003. A recent audit reported that although the orchestra cut its shortfall by 50 percent in 2003-04, it is still carrying a debt of $19.5 million.
The loan financed half of the orchestra's $18 million purchase of the set of 30 rare Italian violins, violas, and cellos from Herbert Axelrod, who put the collection's value at $49 million. Later appraisals put the collection's worth between $15 and $26 million and speculated that some of the instruments had not been made by the Italian artisans Axelrod had claimed they were.
Axelrod was recently sentenced to an 18-month prison term in an unrelated tax-fraud case.