PREPA Says "No Layoffs," But Little Else About Business Plan

The Puerto Rico Electric Power Authority said its recently completed business plan includes no layoffs, but declined to otherwise divulge its contents.

In mid-August PREPA reached forbearance agreements with its bondholders and other creditors that, among other things, specified the authority would create a five-year business plan and recovery program and deliver it to the forbearing bondholders by Monday, Dec. 15.

Over the last few months PREPA and Puerto Rico government officials have given indications that the authority intended to restructure its bonds' terms. A default on its roughly $8.5 billion in revenue bonds would likely be the biggest municipal bond default in United States history.

The plan does not include the dismissal of employees, said president of the PREPA board of governors Harry Rodríguez García in a written statement.

PREPA has decided to make the document confidential. Because it is confidential, Rodríguez García said he would have no further comment on it.

The forbearance agreement did not say that the plan was to be confidential. But it did give PREPA the right to make documents confidential if "not otherwise required to be provided to the trustee under the trust agreement, any transaction document, or applicable law."

The business plan "is a work in progress," said PREPA spokesman Abimael Lisboa Félix. "We do intend, however, to present a status update on our progress to date, highlighting some of important initiatives that we are working on. These initiatives will be important as we continue to develop our turnaround and restructuring plan to ensure PREPA's future, for the benefit of all stakeholders, including our customers and our creditors."

Lisboa Félix declined to say when the update would come.

According to the forbearance agreement the business plan was to include financial projections for the fiscal year beginning July 1, 2015 and the following five years; projections for maintenance, development and environmental capital expenditures; and a proposed set of cost saving and revenue enhancement initiatives.

The forbearance agreement said that the business plan was not to include a proposed PREPA capital structure or proposed adjustments to PREPA debt. The agreement specifies that PREPA should deliver a debt restructuring plan by March 2, 2015.

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