Puerto Rico Electric Power Authority officials were optimistic Friday that they would complete a debt restructuring agreement and pass related legislation quickly.
When PREPA chief restructuring officer Lisa Donahue was asked at a press conference whether she expected the restructuring support agreement with creditors specifying the terms of a deal would be ready next week, Donahue nodded affirmatively.
"We're in the short strokes," she said, using an expression meaning the negotiations were in their final phase.
PREPA executive director Javier Quintana said that PREPA would be presenting a bill to the Puerto Rico legislature next week. Quintana said the authority had presented a general debt restructuring plan in the summer. "Now we are requesting the tools to implement that plan and that is what we need from this legislation."
The draft restructuring support agreement indicates that the enabling legislation would be passed in this legislative session, which ends Nov. 15, Donahue said.
Quintana said the most important parts of the legislation would change PREPA's governance and allow it to use a request for proposals for seeking funding and builders of capital projects. Equally important, the legislation would let the authority create a securitization mechanism for issuing new bonds and give the authority the opportunity to provide a new and modern infrastructure.
"All of these negotiations and these plans are geared toward the lowest [electric] rate possible for the people of Puerto Rico," Donahue said in a Webcast news conference.
PREPA has reached preliminary deals with a group of bondholders and its line of credit holders. It is still negotiating with the insurers of its bonds, Assured Guaranty, National Public Finance Guarantee, and Syncora Guarantee.
As of June 30 PREPA had $9.4 billion in outstanding debt, of which $8.6 billion was bond debt. A default on this debt through a distressed debt exchange, as PREPA is seeking, would be the biggest municipal bond default in United States history.
The bondholders and the line of credit holders are in a forbearance agreement with PREPA that was scheduled to end Friday.
