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Prepa, bondholders agree to extend milestones on their RSA

By on January 30, 2017

SAN JUAN – The Fiscal Agency and Financial Advisory Authority (FAFAA) announced Monday that it agreed with the ad hoc committee of Puerto Rico Electric Power Authority (Prepa) bondholders to extend through March 31 certain milestones of its restructuring support agreement (RSA).

Tuesday was the expiration date for Prepa and its creditors to reach a deal on revisions that will allow for the implementation of the agreement under the Promesa federal law. That deadline has now been extended to March 31, the same day the RSA is slated to expire.

“FAFAA and Rothschild, as financial advisor, will use the time to work with PREPA’s creditors to make the necessary modifications and improvements to the RSA so that we may implement a consensual restructuring under Title VI of PROMESA that will gain the support of Governor Ricardo Rosselló,” the fiscal agent’s executive director, Gerardo Portela Franco, said.

Under the RSA, around 70% of Prepa bondholders agreed to a 15% debt reduction, which will be paid through a bond exchange.

The news comes weeks after the Puerto Rico Energy Commission ordered Prepa to seek the “highest debt relief” possible under Promesa.

Title VI, called the Creditor Collective Action, addresses how bondholders can agree to modify their own bond terms. It says that holders of at least two-thirds of each pool’s principal who vote must approve the modification and holders of at least 50% of total principal outstanding in each pool must approve it.

Under the law, every bond issuer has at least one pool of bonds, which are divided if they have different priorities or security features.

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