PRASA reaches forbearance agreements with creditors
The Puerto Rico Aqueduct and Sewer Authority has reached forbearance agreements with a number of federal and local government agencies to put off making payments for at least six months, according to filings submitted to the Municipal Securities Rulemaking Board on Wednesday.
The delay spared the cash-strapped water utility from paying some $35 million in debt in the form of loans owed to several U.S. government agencies, including the U.S. Department of Agriculture’s Rural Development Program, on July 1.
Historically, PRASA has received federal funds for its Capital Improvements Program through loans granted by the Clean Water State Revolving Funds Programs and the Drinking Water State Revolving Fund Programs, administered by the Puerto Rico Environmental Quality Board (EQB) and the Commonwealth’s Department of Health (PRDOH). The agency has also received proceeds form the U.S. Department of Agriculture’s Rural Development Program by issuing revenue bonds. The Commonwealth secures the loans and bonds.
On June 30, the water utility reached a forbearance agreement with the Health Department and the Puerto Rico Infrastructure Financing Authority (PRIFA), which is an operating agent for the state revolving funds programs.
Under the agreement, the July 1 payments due on the loans are deferred for a six-month period, which can be extended for an additional six months, if conditions are met.
“During the forbearance period, the parties will negotiate new terms and conditions to the state revolving fund loans under a restructuring of such loans and a revision of underlying agreements between PRASA, PRIFA, EQB, PRDOH and, where applicable, the U.S. Environmental Protection Agency,” the filing stated.
PRASA also asked USDA for a short-term forbearance period, through Sept. 30, 2016, during which the public corporation will “examine all options available to correct PRASA’s deficiencies and restore the repayment of the [Rural Development] bonds.”
PRASA spent the better part of the year negotiating with the agencies ahead of the July payment, agency officials confirmed.