Catalysis of the reaction: 6-(2-amino-2-carboxyethyl)-7,8-dioxo-1,2,3,4,7,8-hexahydroquinoline-2,4-dicarboxylate + 3 O2 = 2 H2O + 2 H2O2 + H+ + pyrroloquinoline quinone.
6-(2-amino-2-carboxyethyl)-7,8-dioxo-1,2,3,4,5,6,7,8-octahydroquinoline-2,4-dicarboxylate:oxygen oxidoreductase (cyclizing) activity