The Puerto Rico Electric Power Authority bondholders that have supported the Oversight Board's proposed restructuring — and who hold 27% of the par amount — may soon turn against it.
A law firm representing those bondholders told the bankruptcy court Monday, they will oppose it unless the court confirms the existing deal by Oct. 1.
The firms involved are BlackRock Financial Management, Nuveen Asset Management, Franklin Advisers, Whitebox Advisors, Taconic Capital Advisors and Hudson Bay Capital Management. They collectively hold $2.25 billion in uninsured PREPA bonds of the $8.26 billion of bonds that went into bankruptcy in the summer of 2017.
If this group joins those fighting the board's various restructuring offers, it will mean about 90% of the bondholders will push to negotiate a new deal.
The attorney representing the firms didn't respond to a request for comment by press time. Nuveen declined to comment on the development. BlackRock didn't immediately respond to a request for a comment.
If the proponents join the opponents on October 1, they would work together to win an equal deal for all participants.
A board spokesman pointed to the filing Monday in the U.S. District Court for the District of Puerto Rico that said the board supports a pause in the
Some observers believe Trump will appoint members more sympathetic to bondholders. It is possible this belief — and the U.S. Court of Appeals for the First Circuit rulings over the last year favoring the bondholders — led the group to signal they could withdraw support for the board's deal.
It remains to be seen how U.S. District Judge Laura Taylor Swain responds to the delay request. The bondholders opposed to the board's proposal have called for a pause, while the Official Committee for Unsecured Creditors in the bankruptcy has asked for continuation of the discovery process.
The group including BlackRock reached its initial
The opposing bondholders would get a cash payout equal to 3.5% of their original bonds.
The BlackRock group's bonds would carry an average interest rate of 7%.
The law firm Paul, Weiss, Rifkind, Wharton & Garrison is representing the BlackRock group and signed Monday's notice to the court.
In another development on Monday, LUMA Energy, which handles transmission and distribution of PREPA electricity, filed an adversary proceeding against PREPA and the Puerto Rico Public-Private Partnership Authority in the bankruptcy.
LUMA asked the court to order the defending parties to participate in mediation to resolve a dispute and, if that fails, to side with LUMA.
