The Greeneville Board of Mayor and Aldermen met for two-and-a-half hours Tuesday afternoon with financial advisers to discuss management of the town government's debt.

The workshop was a continuation of discussion in back-to-back workshops on Oct. 12-13 about changing the town's two variable-rate bonds to a new provider because of the downgraded credit rating of the existing provider.

At that time, the board met with representatives of Morgan Keegan & Company Inc., the town's financial adviser.

Joining the discussion on Tuesday, with Chris Bessler of Morgan Keegan, were Mike Garner and Chris Monaghan of Echo Financial Products, and Mark Mamantov, of Knoxville, an attorney with Bass, Berry & Sims.

Echo Financial Products, based in King of Prussia, Pa., has been hired as an adviser by the public building authorities that conducted the variable-rate loan programs.

Bass, Berry & Sims is legal counsel for those public building authorities.

The original amount of the town's two variable-rate bonds, which are for school construction, totals $16 million. Their original trade date is Dec. 20, 2001.

The two bonds are insured by Ambac Assurance Corporation, which has seen its credit rating downgraded during recent months and is facing the possibility of bankruptcy.

According to the financial advisers, the town has three options:

* Do nothing and stay in the existing contract with Ambac;

* Terminate the contract and pay a penalty; or

* Enter a contract with Deutsche Bank Securities.

The penalty to terminate the contract would be based on current market value, which constantly changes, and earlier this week was $980,000, according to Garner.

He said he believes Ambac would be willing to accept approximately $875,000 from the town.

Garner said if the town's ultimate goal is to preserve the financing structure executed in 2001 while eliminating the uncertainties presented by Ambac's credit situation, the change to Deutsche Bank is the best option.

Morgan Keegan already recommended such a change.

Garner said his firm has tried to find the best bank for the town, and Deutsche is its recommendation.

Such a change would require only a small amount of legal fees, a few thousand dollars at most, according to Mamantov.

It would not result in any refinancing or additional debt and would not change the town's interest rate or terms of payment, according to Joe Ayres of Morgan Keegan.

Mamantov said the board's next step, if it wants to change to Deutsche, is to adopt a proposed resolution previously presented by Morgan Keegan.

Bessler said Morgan Keegan has until Dec. 31 to have such changes approved.

Both Mamantov and Monaghan commended the board for its "due diligence" in meeting to discuss the issue.