PREPA Working on Agreement for July 1 Payment

Puerto Rico Electric Power Authority, the utility that's been working on an overhaul of its business and debt for two years, said it was in talks with its creditors concerning a debt payment coming due Friday.

"We're in conversations with our creditors and we hope to address the situation on or before July 1st," executive director Javier Quintana Mendez said in prepared a statement. "As soon as we are in a position to do so, we will communicate the agreement we have reached."

The amount PREPA has due Friday has alternately been reported as $420 million by Bloomberg, $424 million by Janney Fixed Income, and $353 million by Standard & Poor's.

To make previous payments due to bondholders, the authority has borrowed money from certain of its creditors and insurers.

As part of its restructuring agreement with its creditors, the authority was to borrow $110 million from its creditors in two $55 million tranches. In May a group of PREPA's creditors and bond insurers lent it $55 million.

On June 24 the Puerto Rico Energy Commission approved a provisional rate increase of 1.3 cents per kilowatt-hour increase to support payment of PREPA's operating expenses. By the end of the year the commission will decide whether to make this increase permanent or to adjust it up or down.

On June 21 the commission approved a 3.1 cent per kilowatt-hour charge to support a PREPA Revitalization Corp. to pay off PREPA's debt. In total, customers will see a 4.4 cents per kilowatt-hour increase or a roughly 25% increase in rates.

Puerto Rico public sector entities owe a total of about $1.9 billion due on July 1.

The EFE news agency quoted Puerto Rico Chief Financial Officer Melba Acosta Febo as saying that the commonwealth would try to pay interest due on its debt Friday, particularly that on the general obligation bonds, and that all interest due totaled more than $300 million.

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