PREPA Raises Concerns About Bondholders' Offers

The Puerto Rico Electric Power Authority said it has concerns about the assumptions contained in a plan by its forbearing bondholders to stave off a potential default.

PREPA chief restructuring officer Lisa Donahue said in a statement late Wednesday that the authority had already "expressed doubts" about some of the plan's assumptions.

The bondholders plan offers as much a $2 billion in financing for new capital investments, according to documents released by their public relations firm Wednesday. It includes an alternative whereby General Electric Corp. would help build and operate a combined cycle power plan on the island to help lower PREPA's fuel costs.

"While we  appreciate  that the bondholders' have produced a plan that recognizes our need to be in regulatory compliance we remain convinced that a public airing of only certain aspects of the substance or merits of the bondholder plan at this point is premature and could be misleading," Donahue said in the statement. "Therefore we intend at this time to withhold any public comment on the plan's substance until we have had a chance to review it in detail with the bondholders."

PREPA, which owes over $8 billion in power revenue bonds, entered a forbearance agreement with bondholders last August after drawing on reserves to make a semi-annual bond payment in July.