Monday, November 29, 2021

Prepa’s RSA approval by oversight board gets yet another extension

By on June 12, 2017

Fiscal board Chairman José Carrión III and board member Ana Matosantos (Juan J. Rodríguez / CB)

SAN JUAN – The Puerto Rico Electric Power Authority (Prepa) and its creditors have in less than two weeks agreed once more to extend several deadlines under their restructuring support agreement (RSA), the commonwealth’s Fiscal Agency & Financial Advisory Authority (FAFAA) announced Monday.

The June 9 deadline to have the island’s financial oversight board approve the most recent version of the RSA was pushed back to June 16. The change comes amid allegations that the seven-member panel does not have the votes to finally restructure Prepa’s $8.9 billion debt load, as well as the utility’s operations.

Moreover, once the RSA is approved by the fiscal board under Title VI of the federal Promesa law, Prepa will now have until June 28 to finalize the required documentation and begin the voting process by all creditors over the “qualifying modification,” as defined by the out-of-court restructuring process provided by Title VI.

Also pushed to June 28 are milestones related to striking an agreement with certain creditors to fund Prepa’s short-term liquidity needs, as well as to retaining a claims agent as established under the RSA.

The commonwealth government announced in late April that it had renegotiated the RSA—which has been extended in several occasions—that was first struck in late 2015. The new deal cuts Prepa’s debt load by roughly 15% through a debt-exchange mechanism but extended the maturity of debt payments. The Ricardo Rosselló administration had said the latest RSA incorporates “additional estimated savings” of $2.2 billion in Prepa debt service from 2018 to 2022.

All the creditors to the RSA and the commonwealth have agreed the deal should be implemented through Title VI of Promesa, which allows for voluntary agreements for debt restructuring among stakeholders but, as previously reported, there may be some portions of the deal that may have to go through Title III or the court-brokered bankruptcy process.

– Public Finance Editor Luis J. Valentín contributed to this report.

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