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Prepa Explores Binding All Creditors to Restructuring Deal Through Promesa

By on October 4, 2016

SAN JUAN—Puerto Rico Electric Power Authority (Prepa) Chief Restructuring Officer Lisa Donahue said Tuesday that the utility will seek a meeting with the Fiscal Control Board to discuss the utility’s restructuring support agreement (RSA) because Promesa provides the opportunity to bind all creditors to the deal.


Puerto Rico Electric Power Authority (Prepa) Chief Restructuring Officer Lisa Donahue

Prepa reached an RSA to restructure its $9 billion debt through a bond exchange that calls for a rate hike. However, the RSA was reached with only 70% of Prepa’s bondholders. Promesa, the Puerto Rico Oversight, Management and Economic Stability Act, which creates a fiscal board to oversee government finances, also provides for restructuring mechanisms that can bind all of the creditors.

“I think a huge opportunity for us will be to bind all of the creditors and capture the additional $2.7 billion of creditors that aren’t part of the restructuring support agreement. That would be an incremental savings and incremental cash flow, so that would be something we will be exploring,” she said in an aside with reporters after participating in a Senate hearing to discuss the recent islandwide blackout.

Donahue said that Prepa does not have a date set yet to discuss the RSA with members of the fiscal control board.

“We don’t have a time for that. We are putting a presentation and we will be requesting a seating with them but we don’t have an official date yet,” she said.

She also said a team of Prepa’s technical experts are also working on multiple scenarios to convince the Puerto Rico Energy Commission to reconsider its decision to ban the immediate construction of the Aguirre Offshore GasPort, which would help reduce energy rates through the use of natural gas.


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