Additional relief for municipalities now available
SAN JUAN — The Puerto Rico Fiscal Agency & Financial Advisory Authority (Fafaa) and Government Development Bank (GDB) have reached a deal to amend the GDB Restructuring Support Agreement (RSA) and thus provide additional relief to municipalities as they recover from damages caused by hurricanes Maria and Irma more than six months ago.
“Today’s developments are the result of constructive negotiations, creativity and a willingness to reach a consensual agreement that is fair to all parties, especially Puerto Rico’s municipalities when they need our assistance the most,” Gov. Ricardo Rosselló said.
Through the amendment, which will need to be approved by the Requisite Bondholders, each town will be authorized to apply the full amount of their deposits—held by the GDB as collateral against the balance of any loan owed by such municipality to the GDB—upon consummation of the transaction.
The modification also grants towns immediate liquidity by giving each one the opportunity to receive immediate payment, before consummation of the transaction, of 55 percent of the municipality’s undisbursed certified excess special additional contribution (CAE by its Spanish acronym) held by the GDB in exchange for releases.
“The amendment to the RSA is a significant step forward in the GDB’s debt restructuring and the ultimate resolution of the GDB. We are satisfied that the terms of the amendment to the RSA are in the best interests of the people of Puerto Rico, GDB creditors, and the island’s economic recovery,” Rosselló said.
In addition to approval by the Requisite Bondholders, the amendment will require the GDB to seek “certain conforming amendments to the GDB Restructuring Act from the Legislature and certification of the amended RSA by the Financial Oversight & Management Board for Puerto Rico pursuant to Title VI of Promesa” (the Puerto Rico Oversight, Management & Economic Stability Act).