I write in response to the September 14 guest opinion article titled, “Don’t be selective about disclosure,” written by Lynnette Kelly. Though Ms. Kelly raises important issues in her article and we support her stance overall, her facts with respect to PREPA are inaccurately portrayed.

We strongly disagree with Ms. Kelly when she asserts that the Commonwealth of Puerto Rico and its instrumentalities, specifically the Puerto Rico Electric Power Authority (PREPA), have provided more information to certain creditors than the rest of the investing public. The simple fact is this: my clients (the PREPA Ad Hoc Bondholder Group) never received material non-public information from PREPA when they were trading PREPA securities.

When the PREPA Ad Hoc Bondholder Group and its advisors began negotiating with PREPA more than three years ago, we observed many of the disclosure deficiencies noted in Ms. Kelly’s article. That is why as a first step in negotiations, the bondholder group asked PREPA to share more information with the public. After the group’s legal and financial advisors signed confidentiality agreements, PREPA eventually provided cash flow reports, budgets, and other information in a “data room” to which only the PREPA Ad Hoc Bondholder Group’s advisors had access — as is common in restructuring negotiations.

Many members of the Ad Hoc Group later signed their own confidentiality agreements with PREPA to allow them to participate in negotiations that resulted in a restructuring support agreement (the “RSA”) endorsed overwhelmingly by PREPA bondholders and the bond market as a balanced settlement. Members of the Ad Hoc Group occasionally saw proposals from PREPA and received other material non-public information, but only after these holders executed their own confidentiality agreements with PREPA and had internally restricted (i.e., stopped) trading in PREPA bonds. The creditors could only again trade PREPA bonds once PREPA disclosed, or “cleansed,” the non-public information.

Ms. Kelly’s article misstates these facts, as she suggests that certain PREPA bondholders received and may have traded with material non-public information that other PREPA bondholders did not have. My clients were never given material non-public information by PREPA absent having signed a confidentiality agreement and internally restricting their ability to trade the PREPA bonds.
Amy Caton, Kramer Levin, attorney for the PREPA Bondholder Group