The Puerto Rico Electric Power Authority and its bondholder group announced this morning they have resumed talks, after walking away from the table nearly a week ago.
The parties reinstated the restructuring support agreement previously entered into, but with amendments that include an expectation that by Feb. 16th, the PREPA Revitalization Act will be enacted into law in a form that is deemed reasonably acceptable by creditors.
This deadline is four days after the February 12th date that was originally requested by PREPA and its professionals, said bondholders, which include traditional municipal bond investors and hedge funds, PREPA’s fuel line lenders, the monoline insurers and the Government Development Bank.
PREPA also entered into an amended Bond Purchase Agreement (BPA) with the Ad Hoc Group and the monoline insurers, the agency noted.
“The agreements reflect the mutual understanding among PREPA and its key creditors about the importance of PREPA’s financial restructuring and comprehensive transformation,” said Lisa Donahue, PREPA’s chief restructuring officer.
“We have a long way to go, and there remain many uncertainties, but if implemented PREPA’s transformation will have a positive, lasting impact on its finances, operations and culture. We appreciate the hard work of many diverse parties who remain committed to PREPA’s transformation,” she said.
Under the BPA, the bondholder group and other creditors would provide $111 million of additional financing through the purchase of new bonds — with half the notes to be issued once the securitization legislation is passed and the remaining half to be issued once the securitization structure is submitted to the Energy Commission.
“We are pleased to have reached this agreement with PREPA, which puts everyone back on track to consummate a deal that will benefit all stakeholders, especially the people of Puerto Rico,” said Stephen Spencer, financial advisor to the PREPA Bondholder Group.
“We continue to support the PREPA Revitalization Act and the RSA deal as the path to providing PREPA a way back to stable, low-cost financing through access to the United States municipal bond market, and the lowest long-term utility rates possible for the Puerto Rican people,” he said.
The bondholders, he said, have been encouraged by recent public statements from Senate President Bhatia, House Speaker Jaime Perelló, Sen. Ramon Luis Nieves, Rep. Jesús Santa, Gov. Alejandro García-Padilla, and other public officials on the island, “which have made it unequivocally clear that they want to get this deal done and that the additional 25 days we are extending beyond the original deadline is sufficient for the legislation to be passed.”
“We will continue to work collaboratively with both Puerto Rico’s legislators and PREPA to help ensure a bill that preserves the essential elements of our plan and that the necessary milestones we have agreed upon are achieved, for the benefit of all parties involved,” Spencer said.