The Government Development Bank for Puerto Rico spent $2.6 million to pay for the services of two stateside law firms, Cleary Gottlieb Steen & Hamilton LLP and Proskauer & Rose LLP, seeking advice on “financing plans and other related matters.”
The information was first reported by the Wall Street Journal on Monday. Puerto Rico has been riding out an eight-year economic recession that peaked earlier this year, when Standard and Poor’s, Moody’s Investor Services and Fitch Ratings all lowered the island’s credit rating to junk status.
The government has taken a number of steps prior to and after the downgrade to reel in its finances, telling ratings agencies that it will present a balanced budget and will honor its debt obligations.
According to Comptroller’s Office records, the GDB agreed to pay each firm $1.3 million for services rendered Mar. 2-31, which means the firms began working with the government prior to the $3.5 billion General Obligation bond issue completed Mar. 11.
“As fiscal agent to the Commonwealth and its instrumentalities, the GDB regularly solicits advice and counsel from a number of legal and financial advisors with respect to financing plans and other related matters,” the GDB said in a prepared statement.
“Proskauer & Rose LLP and Cleary Gottlieb Steen & Hamilton LLP were engaged by the GDB as part of these ongoing efforts. As is customary, GDB does not comment on the nature or content of any legal advice.”
Although the GDB would not say, in its story the WSJ suggested the stateside firms were likely hired to work alongside Millco Advisors LP, a Washington, D.C.-based affiliate of Millstein & Co LP “to analyze its liquidity, debt load and cash flow as it tries to boost its finances.”
The WSJ noted Cleary Gottlieb partners “have experience in a number of sovereign restructurings, including Greece, Argentina, Russia, Iraq and Jamaica.”
Meanwhile, Millstein was contracted to provide its services from Feb. 5 to Mar. 31., at a fee of $500,000.