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Puerto Rico Gov’t, Creditor Groups Meet on the Island

By on January 18, 2017

SAN JUAN — The Puerto Rico government and major creditor groups will meet Wednesday and Thursday on the island, Financial Advisory & Fiscal Agency Authority (FAFAA) Executive Director Gerardo Portela told Caribbean Business.

According to the official, more than two dozen creditors that include hedge funds, monolines, mutual funds and local credit unions will kick off talks with Gov. Ricardo Rosselló’s fiscal team.

The meetings will be held in San Juan at the Minillas Government Center, where the building shared between the Government Development Bank (GDB) and FAFAA—the island’s fiscal agent in charge debt-restructuring efforts—is located.

The new government administration will seek “to get to know the bondholders and that they do the same with FAFAA. To begin initial talks with them, that they tell us their experience with the past administration, as well as disclose the different terms and conditions they have offered and whether they have changed,” Portela said.

He added that the fiscal team will gather this information and evaluate the alternatives. Moreover, nondisclosure agreements will be signed with some of the participating creditors, Portela said. For the government, its new legal adviser, Dentons, will negotiate these deals along with FAFAA’s in-house counsel.

“Once we have the fiscal plan developed and possibly certified by [Promesa’s fiscal] board, we will be able to negotiate [economic terms] and not in the void because we will have an idea of what we have available, what is the fiscal and economic reality,” said Portela, who stressed that the lack of a certified fiscal plan doesn’t prevent debt negotiations from moving forward.

“I think they go hand in hand, but yes, I understand that in order to negotiate [economic terms], you have to have an idea of your numbers. What we want is to reach a sustainable debt service level that we feel comfortable with, and we will pay,” FAFAA’s director added.

During the first day of meetings, members of the GDB ad hoc group, such as Solus, Fir Tree and Brigade, are expected to participate. Members of the Employees Retirement System ad hoc group, including Centerbridge, Oak Tree and Claren Road, are also take part in the conclave. For the ad hoc group of senior Sales Tax Financing Corp. (Cofina by its Spanish acronym) bondholders,  Whitebox and Golden Tree, are some of the members that are also expected to attend.

Bond insurer Ambac, Backyard Bondholders—which comprises local holders of several types of paper—and the island’s credit unions round out Wednesday’s agenda.

Meanwhile, representatives of Goldman Sachs, Franklin Advisers and OppenheimerFunds, as well as of monolines National and Assured, will be sitting down at the dialogue table on Thursday. Some members of the GDB ad hoc group, such as Davidson Kempner, Monarch, Aurelius and Stone Lion, are also meeting during the second day.

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