Puerto Rico fiscal agent, bondholders authorize amendment to gov’t bank restructuring agreement
SAN JUAN – Bondholders of the Government Development Bank (GDB), Puerto Rico’s insolvent fiscal agent, have ratified an amendment to the institution’s restructuring support agreement (RSA), making progress toward a consensual debt restructuring through Title VI of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).
The amendment, as a result, became effective Monday, according to a statement issued by the Puerto Rico Fiscal Agency and Financial Advisory Authority.
As previously announced on March 27, the amendment will simplify the GDB restructuring transaction while providing relief to island municipalities as they recover from the damage caused by hurricanes Irma and María.
The amendment to the RSA provides that each municipality is authorized to apply the full amount of deposits held at the GDB against the balance of any loan owed to the institution.
The amendment to the RSA gives each town the “opportunity to receive immediate payment,” before consummation of the transaction, of 55% of the municipality’s “undisbursed certified Excess CAE [Spanish acronym for Special Additional Contribution, an additional property tax that is the main source for the payment of bonds] held at GDB in exchange for releases.”
The amendment also results in structure whereby GDB’s financial creditors will exchange their claims for one tranche of new bonds at an upfront exchange ratio of 55%.