The Puerto Rico Electric Power Authority and its creditors reentered a restructuring support agreement after hashing out acceptable terms for additional financing.
A group of the municipal bond holders, lines of credit holders, bond insurers and the Government Development Bank for Puerto Rico signed the agreement, according to a statement Wednesday evening from PREPA. Holders of about 70% of the debt are parties to the agreement.
An earlier version of the restructuring support agreement ended Friday night when a deadline for Puerto Rico's government to adopt energy sector reform legislation passed without the legislation having been adopted.
The new agreement sets Feb. 16 as the deadline for passing the legislation.
After the last agreement ended, PREPA and the Ad Hoc Group of Forbearing Bondholders provided conflicting accounts about the circumstances and reasons for the agreement's end. One of the issues was the timing of $115 million of additional financing to service interest.
In the new agreement the creditors will provide $111 million of financing through the purchase of new bonds. The creditors will purchase half of this sum once Puerto Rico passes a law including the securitization of PREPA's debt. The creditors will purchase the other half when the securitization structure is submitted to the Energy Commission for its approval.
"We have a long way to go and there remain many uncertainties, but if implemented PREPA's transformation will have a positive, lasting impact on its finances, operations and culture," said PREPA chief restructuring officer Lisa Donahue.
Stephen Spencer, financial advisor to the PREPA bondholder group, said he expected the bondholders to continue to work collaboratively with Puerto Rico's legislators and PREPA. "We have been encouraged by recent public statements from Senate President Bhatia, [House] Speaker Jaime Perell-, Sen. Ram-n Luis Nieves, Rep. Jesús Santa, Gov. García Padilla, and leading public officials on the island, which have made it unequivocally clear that they want to get this deal done and that the additional 25 days we are extending beyond the original deadline is sufficient for the legislation to be passed."
