Thursday, October 17, 2019

Puerto Rico gov’t awards new contracts to legal, financial advisers

By on July 20, 2017

SAN JUAN — With the beginning of the new fiscal year July 1, the government of Puerto Rico began to either grant or renew contracts with advisers who assist it in the process of restructuring the island’s debt.

The law firm O’Melveny & Myers—which leads the administration of Gov. Ricardo Rosselló’s legal counsel—formally obtained its first contract. It amounts to $18 million and runs until June 30, 2018. The island’s Fiscal Agency & Financial Advisory Authority (Fafaa) signed the agreement on behalf of the government.

Meanwhile, the commonwealth’s lead financial and restructuring advisers, Rothschild, extended its relationship with the administration with a $15.7 million contract through next summer. The international firm obtained its first contract on March 3, for $6.4 million. It had expired June 30 with the end of the fiscal year.

O’Melveny’s lawyers will charge for hours worked, according to the rate schedule included in the contract. The document, a copy of which was obtained by Caribbean Business, reveals that the firm’s attorneys who assist the government bill $865 to $1,350 an hour.

O’Melveny and Rothschild lead the legal and financial consulting, respectively, for the administration on everything related to the government debt’s restructuring. (Juan J. Rodríguez / CB)

A few months ago, O’Melveny took over the Rosselló administration’s legal counsel reins, which were first held by Dentons. The latter had been announced at the beginning of the administration as its lead legal counsel, but ceased to be so shortly thereafter due to differences between the government and the firm, sources said.

The government would not renew Dentons’ contract and it is unknown how much money the administration finally paid the law firm under the two contracts it obtained during the first six months of this year and which totaled $6 million.

Meanwhile, law firm Greenberg Traurig will continue to assist the Puerto Rico Aqueduct & Sewer Authority ($3 million) and Fafaa ($1.75 million). Both contracts will be valid until June 2018. The Miami-based firm also provides services to the Puerto Rico Electric Power Authority (Prepa), under a $6 million contract that runs until next summer.

On June 16—days before the island’s financial control board began a bankruptcy process for Prepa under Title III of the federal Promesa law—Greenberg obtained a $1 million contract until the end of that month. Several of its attorneys have already requested to intervene in Prepa’s bankruptcy process in representation of the power utility.

What’s more, for $1.7 million and until next summer, the GDB granted another contract to Cleary Gottlieb, lead counsel for the administration of former Gov. Alejandro García Padilla. When asked by Caribbean Business a few months ago about the decision to keep Cleary, GDB President Christian Sobrino said it was due to a legacy matter, but offered no additional details.

Another firm expected that renewed its relationship with the government is Ankura, a law firm that advises the GDB, Fafaa and other commonwealth entities. For this fiscal year, the restructuring advisory firm already obtained an $8 million contract with Prepa, to advise the utility on its fiscal plan and restructuring efforts.

Prior to that, for a total $775,000, the firm was awarded on May 30 with a one-month contract with Fafaa. It had previously obtained a $1.6 million contract with the GDB. Both of these arrangements expired on June 30, although both Fafaa and the GDB are expected to retain Ankura’s services, sources said.

Working for the firm from Puerto Rico are two ex officials under former Gov. Luis Fortuño’s administration: former GDB President Juan Carlos Batlle and Jorge San Miguel, who served as Fortuño’s adviser and head of platform in 2008 and 2012.

Local law firm Pietrantoni, Méndez & Álvarez (PMA) also obtained contracts with the government. For $750,000, the firm with headquarters in Hato Rey’s Milla de Oro will offer services to the Government Development Bank (GDB). It will do so as well for Fafaa, for $600,000. Both contracts are in effect until June 2018.

Cancio, Nadal, Rivera & Díaz, another local law firm, will provide services to Prepa under a $2.2 million contract in effect until summer 2018.

Other consulting contracts under Fafaa for the new fiscal year include V2A ($600,000), Bluhaus Capital ($540,000), DLA Piper ($700,000) and Devtech Systems ($450,000). The latter also worked during the former administration in the development of economic models and analyses.

Lastly, Fafaa also registered a contract with Public Safety Director Héctor Pesquera, who will earn $250,000 this fiscal year.

The combined sum of contracts granted by Fafaa to date is roughly $40 million, or slightly less than half of the entity’s budget this fiscal year.

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