The Puerto Rico Electric Power Authority, the public corporation with more than $9 billion of debt that is working with bondholders on a plan to revamp its operations, said it hired Goldman Sachs as a "potential underwriter" to work with its advisors on a "potential financing transaction."
The power authority disclosed the hiring as it announced that its forbearance agreement with bondholders had been extended to June 4 from April 30.
"Today's forbearance extension to June 4, 2015, allows PREPA to focus on several key milestones in the transformation of the utility," Lisa Donahue, Chief Restructuring Officer of PREPA, said in the press release. "The creditors' agreement to an extended forbearance demonstrates that we are making progress and working together to find workable solutions for all stakeholders."
PREPA entered the forbearance agreement last year and hired Donahue, a global co-leader at Alix Partners, after drawing on its debt service reserve to make a bond payment. The bondholders have offered a plan that they said would help PREPA to avoid default and would include $2 billion of capital investment. Donahue said the capital investment was roughly the amount needed. The authority said, however, that the bondholders overall plan was at least $3.1 billion, or 7.75%, overly optimistic on costs.
The creditors agreed not to take any enforcement actions while the forbearance agreements remain in effect, PREPA said. "PREPA is pleased with the 35-day extension, which will allow us to continue our work without interruption and deliver a recovery plan by June 1. We have several workstreams in process that will provide key information for that proposal. We remain focused on achieving our restructuring and optimization goals for the benefit of the people of Puerto Rico," Juan Alicea, PREPA's Executive Director, said in the release.
