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Prepa Affirms $212M Contribution to Retirement System

By on October 23, 2016

SAN JUAN — The Puerto Rico Electric Power Authority (Prepa) claimed that as part of its public debt restructure, it contributed $212 million to the Retirement System during the past two years.

Prepa Executive Director Javier Quintana Méndez stated that one of the public agency’s priorities was to make monetary contributions to its employees’ Retirement System, both active and retired.

Puerto Rico Electric Power Authority headquarters in Santurce / Inter News Service

Puerto Rico Electric Power Authority headquarters in Santurce / Inter News Service

The public official rejected allegations by the Irrigation & Electrical Workers Union (Utier by its Spanish acronym) along with its chapter of retirees, regarding Prepa’s non-compliance to pay the $62 million it owed to the Retirement System due to prioritizing agreements with bondholders.

“We made a commitment to them and we have fulfilled with the $6.8 million monthly contribution to the Retirement System, despite the Authority’s current financial situation,” expressed Prepa’s executive director.

Workers said that by changing its priorities to comply with its $9 billion debt with bondholders, Prepa has set aside its commitment to contributions destined for retirees and active employees.

Quintana Méndez rebutted that he has defended the contribution, precisely as part of the forbearance agreements, achieved with primary creditors through a plan presented by Prepa Chief Restructuring Officer Lisa Donahue, from the AlixPartners consulting firm. He explained this has allowed Prepa to contribute over $212 million from June 2014 till the present year.

“Ironically, the agreements with our creditors, which Utier and the retirees association have consistently criticized, are what have given us liquidity to comply with the employer contribution,” he observed, adding that if those contracts with creditors hadn’t been achieved, Prepa’s debt to the Retirement System would surpass $260 million.

Read more: Credit-Rating Agencies, Banks Conspire to Defraud Prepa Bondholders

“However, we listened to Utier’s leadership and the retirees association opposing agreements with creditors, opposing savings measures implemented in the company, and they also oppose the provisional tariff of 1.29 cents kilowatt/hour, which gives us liquidity to fulfill our obligations,” added the electricity company’s president.

According to Quintana Méndez, the debt of nearly $62 million of ordinary contribution referenced by Utier precedes the forbearance agreements, and it was accumulated due to Prepa’s lack of liquidity.

“As soon as we signed said agreements, which allowed us to renounce certain requirements and arrangements from the Trust Agreement of 1974, we began to have sufficient liquidity to cover some ordinary obligations, such as the budgeted employer contribution,” he concluded.

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