PREPA extends RSA agreement with creditors
The Puerto Rico Electric Power Authority, Puerto Rico’s publicly owned electricity provider, announced Thursday an extension of the Restructuring Support Agreement to March 31, 2017.
The parties agreed to a date of Jan. 31, 2017 to reach agreement on revisions to allow for implementation under the Puerto Rico Oversight, Management and Economic Stability Act or another mutually agreed mechanism.
“Today’s actions show the forward momentum of PREPA’s transformation and the willingness of all parties to work together,” said Luis R. Benítez, chairman of PREPA’s governing board.
“Our management and employees remain focused on the restructuring work streams along with the CRO team, which will ultimately provide the people of Puerto Rico with a self-sustaining utility that provides clean, safe electricity to its customers,” he said.
Meanwhile, the bondholder group classified the agreement as a “positive step.”
“The PREPA bondholders believe that the extension of the RSA is a positive step, and believe that it will ultimately lead to the implementation of the PREPA deal by mid-2017,” the group said in a statement.
“To date, PREPA’s creditors have supported PREPA with more than a billion dollars of incremental financial support — at a time when PREPA has no access to financial markets — and allowed PREPA to pass along nearly $2 billion of fuel cost savings to customers,” they said.
“Furthermore, in this RSA extension creditors have agreed to forgo reimbursement of substantial deal-related expenses pending an agreement on or before Jan. 31 that will set forth the path to near-term execution of the PREPA deal,” the group said.
The delays in consummating the PREPA deal (including the non-consolidation of validation proceedings for the new bonds) have led to significant additional expense and risk for PREPA ratepayers and creditors alike, the group said.
“This risk is furthered by the rising interest rate environment announced yesterday by the Federal Reserve Bank,” the group said. “In spite of these challenges, we remain committed to the completion of this deal, which is still the sole consensual agreement reached between the Commonwealth and a significant creditor group.”
“We are confident that the execution of the RSA, which would represent the culmination of over two years of work by both sides, continues to represent the best path forward for the people of Puerto Rico, PREPA and its creditors,” the group said.