Ambac Assurance Corp. sued the Puerto Rico Highways and Transportation Authority to prevent what the insurer called improper siphoning of money.
In its suit Ambac asks the United States District Court for Puerto Rico to appoint a receiver for the authority. Ambac filed the suit late on Tuesday.
Ambac said Wednesday that by extending a concession agreement with Autopistas Metropolitanas de Puerto Rico on two toll highways for 10 years, the PRHTA is opening the door to the authority's loss of $115 million to the central government. Puerto Rico allows its governor to decide on what to do with the authority's revenues.
Ambac claims that the latest contract is just the authority's latest breach of contract and fiduciary duty. The complaint also accuses the authority of not taking advantage of $750 million in federal toll credits, failing to issue timely financial statements, and refusing to provide contractually required financial disclosure to Ambac and other bond insurers.
"The PRHTA's board's decision to monetize over $100 million of unencumbered assets in a manner that allows the money to be taken by the GDB or used to pay commonwealth debt at this time is a clear abdication of their duties," Ambac chief executive officer Nader Tavakoli. "We believe the appointment of a receiver is essential to reducing conflicts of interest, improving transparency, and protecting the interests of creditors. We continue to urge the governor to engage in good faith negotiations aimed at consensual agreements with the creditors of the PRHTA and Puerto Rico in general."
As of Dec. 31 Ambac insured $471 million in net par outstanding of PRHTA debt. Its total exposure to Puerto Rico was $2.16 billion of net par outstanding.
Neither the PRHTA nor the Government Development Bank for Puerto Rico, which oversees Puerto Rico's debt, responded to a request for a comment.
