Prepa restructuring support agreement extended until March
SAN JUAN – Luis R. Benítez, president of the Puerto Rico Electric Power Authority’s (Prepa) governing board, announced Thursday evening the extension of the utility’s restructuring support agreement (RSA) with its principal creditors until March 31.
In a written statement, the public official explained that the agreement establishes Jan. 31 as the date Prepa and the RSA creditors reach an agreement on the revisions that allow for their implementation “under the Promesa act or any other agreed upon mechanism.”
“Today’s actions show the forward momentum of Prepa’s transformation and the willingness of all parties to work together. Our management and employees remain focused on the restructuring work streams along with the CRO [chief restructuring officer] team, which will ultimately provide the people of Puerto Rico with a self-sustaining utility that provides clean, safe electricity to its customers,” Benítez said in the statement.
Prepa has said it plans to use Promesa to bind 30% of the creditors who declined to be part of the RSA to the agreement, which only covers 70% of the creditors.
The extension of the agreement also resulted in the extension of the contracts with AlixPartners and Prepa Chief Restructuring Officer Lisa Donahue as well as other advisers, which have had a combined $70 million cost. Next year’s budget allocates $29 million for restructuring costs. The incoming New Progressive Party administration has said it is going to evaluate the contracts, but has refrained from saying whether these would be cancelled.
The Puerto Rico Energy Commission is evaluating Prepa’s request for a rate hike by examining the authority’s revenue requirement. The utility put in effect a provisional 1.299 cent rate hike in August. Prepa is also slated to impose a transition charge of 3 cents to pay for a securitization of its bonds.
“This important action shows the willingness of all parties to continue working together and pushing the transformation required and needed by Prepa,” the public utility head says in the statement.