Saturday, September 14, 2019

Puerto Rico gives uninsured utility bondholders until Friday to join restructuring agreement

By on May 29, 2019

(CB file)

Secured holders were given until Wednesday

SAN JUAN – The Puerto Rico government gave uninsured bondholders of the island’s electrical utility until Friday to decide if they will join the agreement to restructure the public power corporation’s $8.3 billion debt.

Failure to join the restructuring support agreement (RSA) “and tender your uninsured bonds for assignment of a new cusip by 5:00 p.m. on Friday, May 31, 2019 could result in potential diminution in a beneficial owner’s economic return,” a published statement reads.

Bonds that are insured under a primary insurance policy or secondary insurance policy are not eligible for the opportunity, the statement adds.

Caribbean Business learned that some secured bondholders were given until Wednesday to make a decision about joining the RSA. The notice was addressed to Puerto Rico Electric Power Authority (Prepa) revenue bondholders.

A group representing 40% Prepa’s bondholders, bond insurer Assured Guaranty Corp., along with the island’s government and its Financial Oversight and Management Board, on May 3 announced an RSA that would reduce the utility’s debt by up to 32.5%.

Under the agreement, bondholders will exchange their Prepa bonds at 67.5 cents on the dollar for new Tranche A bonds and 10 cents on the dollar for new Tranche B bonds. The latter would be contingent on full payment of Tranche A bonds and future electricity demand on the island.

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