Puerto Rico’s government reached a new deal on the Puerto Rico Electric Power Authority debt, with the creditors making additional concessions.
Gov. Ricardo Rosselló announced the new deal on Thursday in a press statement. The governor said that an “agreement in principal” had been reached with the authority’s creditors: the Ad Hoc Group of PREPA Bondholders, line=-of-credit holders, bond insurers, and the Government Development Bank for Puerto Rico.
The previous PREPA deal with creditors had been under negotiation since mid-2015, with most of the terms reached around the fall that year.
“We are pleased to have been able to reach this agreement with the Fiscal Agency Financial Advisory Authority (FAFAA) and the Administration of Governor Ricardo Roselló, which we believe represents a fair solution for all parties,” said the Ad Hoc Group of PREPA Bondholders. “We have worked for nearly three years to support PREPA and the completion of the RSA agreement, and we are confident that this outcome is in the best interest of Puerto Rico, its people and the future of PREPA as a sustainable utility.”
Rosselló said that the Restructuring Support Agreement with creditors had been extended until April 13 to allow a document to be completed with the terms of the agreement.
The new agreement will lead to an additional $1.5 billion in debt service savings for PREPA from 2018 to 2022 compared to the existing RSA, Rosselló said. It will lead to $2.2 billion in savings for PREPA in this period compared to the contractual debt terms.
The administration estimated that the new agreement would reduce the customer transition charge by 36% in the period. The transition charge in both the existing and new agreement is specifically to pay off debt. The reduction would reduce the average household annual electricity bill by about $90 per year over the next five years, according to Rosselló.
“I believe that the negotiated terms represent fair additional contributions by all parties to the RSA and will set PREPA on a path toward becoming a modern utility that will provide reliable power at sustainable rates to the people of Puerto Rico,” Rosselló said.