The Puerto Rico Electric Power Authority Thursday
Insurers and bondholders controlling more than 60% of PREPA's outstanding bonds entered into contractual arrangements and agreed to amend existing bond documents to provide PREPA with liquidity and time to work with its creditors to develop a plan to achieve a restructuring of its business, the authority said in a news release Thursday.
The insurers and bondholders who signed the agreements, including those that have commenced litigation against the Debt Enforcement and Recovery Act, have agreed that they will not exercise remedies against PREPA during the term of these agreements. During this period, PREPA will continue to make required debt service payments in full, the authority said.
The recovery act legislation established a process for some of the commonwealth's public corporations, including PREPA, to restructure their debts
The banks that provide revolving lines of credit used to pay for purchased power, fuel and other expenses have agreed to extend until March 31, 2015 their previously announced agreements to not exercise remedies as a result of certain credit downgrades and other events, PREPA said in its release. These agreements allow PREPA to continue to delay certain payments that were due to these lenders in July and August, respectively, until March 31, 2015. During this period, the banks will receive interest payments on these amounts.
As part of its agreements with the creditors group, PREPA committed to complete a five-year business plan by December 15, 2014 and to appoint a chief restructuring officer (CRO) by September 8.
PREPA also promised to file a notice on the Municipal Securities Rulemaking Board's EMMA system outlining the key terms of its agreements with the creditor groups.
