Judge Swain rejects $1 billion loan to Prepa
U.S. District Court Judge Laura Taylor Swain ruled against allowing the commonwealth to give the Puerto Rico Electric Power Authority a $1 billion loan but left the motion open to allow the parties to submit another loan petition to the court.
She said the loan could be unsecured but could not be larger than $300 million. Taylor Swain added that the commonwealth should not have a super priority in payment over other creditors. The loan terms should not preclude bondholders nor the court from participating.
Prepa officials insisted during the Prepa omnibus hearing that unless they get the loan, the utility will have to start cutting power as early as this weekend.
Government officials and their advising firm Rothschild testified that they did not conduct an analysis to determine if the commonwealth could lend $1 billion to the Puerto Rico Electric Power at terms that were less favorable to the utility.
The revolving credit line was lowered from the original $1.3 billion to $1 billion by the Financial Oversight and Management Board late Wednesday.
Earlier this morning, Puerto Rico Fiscal Agency & Financial Advisory Authority head Gerardo Portela as well as Rothshild Executive Dustin Mondell admitted that they represented both Prepa and the commonwealth in the transaction despite the two entities being in opposing sides of loan. Therefore there was no “arms length” type of negotiation.
This is a breaking news story. Stay connected to caribbeanbusiness.com for further details.
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