Puerto Rico's Senate approved legislation that would enable the island's main electricity provider to restructure almost $9 billion of debt.
The upper chamber passed the bill in a 16 to 10 vote late Wednesday. The measure now moves to the House, which will weigh in on the legislation. A special joint commission worked on the bill to create one measure for both chambers. A debt-reduction agreement between the Puerto Rico Electric Power Authority and its creditors expires Feb. 16 unless lawmakers pass the legislation.
"This legislation provides Prepa with critical tools to make Prepa the modern utility that Puerto Rico needs and deserves," Javier Quintana Méndez, executive director of the utility known as Prepa, said in a statement. "We look forward to further legislative action that will allow Prepa to continue to provide the people of Puerto Rico with safe, reliable and clean electricity."
The legislation would allow Prepa, as the utility's known, to reduce its obligation through a debt exchange where bondholders accept a 15 percent loss on their securities. Savings on principal and interest payments would enable the agency to rehabilitate facilities to burn more natural gas and decrease its reliance on crude oil to produce electricity.
Without a restructuring, Prepa is unable to pay creditor bills due July 1, Lisa Donahue, the utility's chief restructuring officer, told a U.S. House Natural Resources Committee last month.
