Assured Files Motion to Lift Stay, Challenges Executive Orders Diverting PRHTA Toll Revenues
SAN JUAN – Following Bermuda-based Assured Guaranty Ltd.’s motion and form of complaint filed Thursday “challenging the executive orders diverting pledged toll revenue collateral that secures the payment of bonds issued by the Puerto Rico Highways and Transportation Authority (PRHTA),” the holding company said in a statement that the toll revenues are not subject to clawback for payment of the Commonwealth’s general obligation debt under the Puerto Rico Constitution.
Assured Guaranty Municipal Corp. and Assured Guaranty Corp., two bond insurance subsidiaries of Assured Guaranty Ltd. (together with their parent, Assured Guaranty), filed a motion and form of complaint in Federal District Court in Puerto Rico seeking relief from the stay provided by the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). The lawsuit further seeks a declaration that the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act (Moratorium Act). Additionally, it seeks damages for the value of toll revenues diverted and injunctive relief “prohibiting the defendants from taking any further action under the Executive Orders,” according to the company’s release, of which the rest follows:
“With this action, Assured Guaranty is seeking to protect the lien on the pledged toll revenues that secures the payment of PRHTA bonds, which the Commonwealth has already invaded under the purported authority of the Moratorium Act. Even more unjustifiably, through these Executive Orders, the Commonwealth is intent on using pledged toll revenues to fund so-called “essential services” payments to the Government Development Bank for Puerto Rico, which is a deeply subordinated, affiliated, insider creditor of PRHTA, and to other contractually subordinated PRHTA expenses prior to the payment of senior secured PRHTA bonds. In light of the Commonwealth’s irresponsible and unlawful conduct, Assured Guaranty is determined to take reasonable and necessary actions to protect its legal rights as insurer of PRHTA bonds.
“Notwithstanding Assured Guaranty’s dispute with the Commonwealth over the unlawful diversion of the pledged toll revenue collateral, Assured Guaranty stands ready to work constructively with its insured Puerto Rico credits and the PROMESA oversight board to address the Commonwealth’s financial and liquidity challenges.
“As always, investors owning Puerto Rico-related bonds insured by Assured Guaranty will continue to receive uninterrupted full and timely payment of scheduled debt service in accordance with the terms of Assured Guaranty’s insurance policies.
“With $12 billion in claims-paying resources across its group of companies and approximately $400 million generated each year from its $11 billion investment portfolio alone, Assured Guaranty’s liquidity and capital position are very strong.”
Most companies include a cautionary statement regarding forward-looking statements.
“Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of July 21, 2016,” the company warns.