The successful rehabilitation of First City Bancorporation of Texas Inc. is hindered by the apparent failure of some debt holders to accept current conditions for tendering their bonds, according to the head of a private group seeking to complete a $1.5 billion restructuring of the company. ``Each day of delay costs money,'' said A. Robert Abboud, a Chicago investor, in a speech to the French-American Chamber of Commerce on Wednesday. As of last week, 51 percent of First City's $225.8 million in bonds had been tendered, but the restructuring deal requires 90 percent participation by the close of business next Tuesday. ``It's not in their best interest to hang onto the bonds if they're going to crater the deal in the process,'' Abboud said. Caving into demands for better terms could set a negative precedent for similar transactions in the future, he said. Senior debt holders have been offered 45 cents on the dollar for their debt, while subordinated debt holders have been offered 35 cents. ``On a liquidation basis, their investment is worth zero,'' Abboud said, referring to the $100 million in subordinated debt. ``Once the preconditions are established, we have to stick to them.'' ``The professionals in the market should understand that (banking) is not a regular industry,'' Abboud said. ``The institutions that are so integral to our financial system should know this.'' He did not elaborate. Abboud is trying to restructure Houston-based First City using $970 million in assistance from the Federal Deposit Insurance Corp., $500 million infusion of capital raised privately by an investor group headed by Abboud and a spinoff of $1.79 billion in book value of poorly performing assets. First City, the state's fourth-largest bank holding company with 59 banks in Texas and one in South Dakota, grew quickly during the Texas oil boom, but was hammered by energy and real estate losses when oil prices plummeted. For 1987, the company posted a $1.1 billion loss. Abboud, who become chairman under the federal bailout plan, said he was optimistic a deal could be closed by March 31. Besides a successful tender, First City still needs to renegotiate unfavorable leases. First City shareholders already have voted to support the Abboud plan.
