Public Corporation Seeks Approval to Implement Consensual Restructuring With Bondholders
San Juan, Puerto Rico -The Puerto Rico Electric Power Authority (PREPA) provided additional detail on its previously announced extension and supplement to its restructuring support agreement (RSA) with the ad hoc group of PREPA bondholders, the fuel line lenders, the monoline insurers and the Government Development Bank for Puerto Rico. The RSA provides for a consensual debt restructuring of the outstanding revenue bonds and credit agreement obligations under Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) pursuant to a timeline that could allow the transactions to be completed by September 2017. PREPA is not part of the Commonwealth Title III and PREPA does not anticipate that the Commonwealth Title III will have a significant impact on PREPA.
The Title VI proceeding contemplated by the RSA would restructure only the outstanding insured and uninsured revenue bonds and certain obligations under credit facilities. Title VI is intended to be an out-of-court consent solicitation related to the financial indebtedness, and only briefly goes to court at the very end to confirm the voting results and get an order approving the consensual deal. A Title VI process does not involve a restructuring or modification of the claims of PREPA’s other creditors and suppliers.
“The RSA contemplates a financial restructuring of the outstanding revenue bonds and claims under credit agreements under Title VI, pursuant to the terms of the RSA”, said Ricardo L. Ramos, PREPA Executive Director. “The RSA as supplemented is designed to provide PREPA the flexibility to modernize its operations and further its goal of providing reliable and cost-effective energy to the people of Puerto Rico,” continued Ramos. The RSA, as supplemented, achieves an estimated $2.2 billion in debt service savings for the period of 2018 through 2022.