WASHINGTON – A congressional subcommittee has invited Puerto Rico Gov. Ricardo Rossell- and two members of the Puerto Rico oversight board to speak as witnesses during a hearing Wednesday on the status of the Puerto Rico Electric Power Authority's restructuring support agreement.
If the invited witnesses, including oversight board chair José Carri-n and board member Ana Matosantos, confirm, the governor would speak alone on a first panel before the House Natural Resources Committee's Subcommittee on Indian, Insular and Alaska Native Affairs and the two oversight board members would speak on a second panel along with a number of other witnesses.
The two board members would be joined by: Luis Benitez Hernandez, chairman of the PREPA governing board; Stephen Spencer, managing director with Houlihan Lokey and a representative for Franklin Advisors and OppenheimerFunds; Adam Bergonzi, managing director and chief risk officer with National Public Finance Guarantee; and Rob Bryngelson, president and chief executive officer of Excelerate Energy in Texas.
PREPA, the primary power utility in the territory, currently has roughly $8.9 billion in debt and its restructuring support agreement (RSA) is coming close its expiration date of March 31. The RSA is meant to help PREPA address its debt obligations by lowering its overall debt burden and total debt service as well as by providing a five-year period where the agency will not have to pay principal and can use the savings to invest in updated infrastructure. In its current form, the RSA would have creditors exchange roughly $5.6 billion in uninsured legacy power revenue bonds for $4.8 billion in securitization bond debt, a 15% haircut.
The RSA has been extended 15 times since terms were first agreed to in December 2015, the subcommittee said.
Puerto Rico's former Gov. Alejandro García Padilla appointed new members to the PREPA governing board in November 2016 in an effort to depoliticize the board. The new board reviewed and approved the PREPA RSA in January and is continuing negotiations with creditors on finalizing the agreement, according to the subcommittee. However, the Rossell- administration has shifted the work of negotiating the RSA with the creditor community to the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF) from the PREPA governing board.
The AAFAF's review of the RSA has led to continued negotiations between the Puerto Rico government and the creditors, with Rossell- saying he is hoping to negotiate a better deal within the RSA's existing framework.
Creditors have indicated they would be open to further adjustments in favor of the government but have said they will not negotiate any major changes to the RSA terms, according to the subcommittee.