Thursday, April 27, 2017

Government of Puerto Rico answers GO bondholders

By on April 19, 2017

Gov. Ricardo Rosselló. (Juan J. Rodríguez/CB)

Gov. Ricardo Rosselló. (Juan J. Rodríguez/CB)

SAN JUAN – Government advisers said Wednesday that Gov. Ricardo Rosselló and his representative to the fiscal control board, Elías Sánchez, complied with the confidentiality agreements that exist as part of the mediation process underway with some creditor groups.

“The government and its officials take seriously, and are in compliance with, the protocol governing the mediation,” reads the letter signed by John Rapisardi, a government adviser from the law firm O’Melveny.

The letter is addressed to former bankruptcy judge Allan Gropper, who leads the mediation between Puerto Rico government advisers, the fiscal control board and GO and Cofina bondholder groups. Negotiations have been taking place since last week in New York and end April 21.

Earlier today, a group of GO bondholders claimed that both the governor and Sánchez did not respect the rules of the negotiation after commenting yesterday on the mediation process during a forum held by the Puerto Rico Chapter of the Business Council of Latin America.

During the event, Sánchez said there was still no term sheet on the table with GO and Cofina creditors. He added that, in his view, some creditors “have not understood well” the Promesa law or the fiscal plan, and that the government hopes to receive proposals from creditors. The governor said “the ball was on the [bondholders’] court.”

According to the letter from the government adviser, the governor and Sánchez’s comments were “completely appropriate and did not divulge any confidential information or positions taken by creditors during the mediation.”

The letter adds that the comments reiterate the government’s desire to “receive constructive proposals from its creditors” that allow reaching consensual agreements. As for Sánchez’s expressions on how creditors see the government’s fiscal plan, Rapisardi indicates that these are based on comments that creditors themselves have made publicly prior to the start of mediation.

“Creditors have waged a campaign against the fiscal plan via press release and publicly laid out their views on the fiscal plan with great specificity,” the government alleges through its legal counsel.

However, Andrew Rosenberg, spokesman for the ad hoc group of GOs, said today in writing that Sánchez’s indifference to the rules of the mediation agreement and his distortion of Promesa are characteristic of a government that’s getting ready for bankruptcy and does not want to be taken seriously by capital markets.

Caribbean Business sources indicated that there are confidentiality agreements that prevent public comment on the mediation process for a certain period of time. Meanwhile, the rules of the game also provide for a process of disclosure of financial information that has been shared confidentially during the negotiations. The creditors who sign these agreements are prevented from trading their bonds until the information shared with them on a confidential basis is disclosed to the market.

 

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