Tuesday, July 23, 2019

Puerto Rico gov’t: Votes needed for GDB’s qualifying modification received

By on September 13, 2018

SAN JUAN — The Puerto Rico Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym) and the Government Development Bank for Puerto Rico (GDB) announced that “preliminary results” indicate that the “requisite votes have been received” for creditor approval of the qualifying modification for the GDB under Title VI of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa), contemplated under the restructuring support agreement, “by and among” the bank and some of its creditors.

A qualifying modification would allow that a debt issuer’s “assets, funds, or resources” be “loaned to, transferred to, or otherwise used for the benefit of a covered territory or another covered territorial instrumentality of a covered territory,” after consulting with creditors and being certified by the island’s fiscal oversight board. If all Title VI requirements are satisfied, it would then be entered as an order by the U.S. District Court, which the government said is “expected to occur on or after” Nov. 6.

Aafaf CEO and GDB President Christian Sobrino emphasized in a release that with the conclusion of the solicitation, the government “moves one step closer to completing the first consensual debt restructuring under Title VI of PROMESA.”

He stressed that one of Gov. Ricardo Roselló’s main objectives is to gain access to the capital markets through consensual negotiations, “while safeguarding the best interests of the people of Puerto Rico and all its municipalities,” Sobrino’s statement reads.

According to the news release, preliminary information provided by the “calculation agent,” Epiq Corporate Restructuring, indicate that before 5 p.m. on Sept. 12, the voting deadline, the GDB received the votes needed from holders of participating bond claims to approve the qualifying modification as required under Promesa.

“Specifically, based upon a preliminary review of the Ballots received by the Calculation Agent prior to the Voting Deadline, eligible voters delivered Ballots to the Calculation Agent voting over 70% of the aggregate principal amount of the Participating Bond Claims in the GDB Bond Claims Pool, with over 95% of the Participating Bond Claims that voted in such pool voting to approve the Qualifying Modification.

“In addition, the preliminary review indicates that the necessary votes were received with respect to the Guaranteed Bond Claims Pool. These results are preliminary and subject to tabulation, reconciliation and verification by the Calculation Agent in all respects, and therefore may change. The final results of the Solicitation are expected to be available on or about September 19, 2018,” according to the release.

Sobrino “confirmed that five of the six municipalities that hold Participating Bond Claims have voted in favor of the Qualifying Modification and that 26 of the 30 municipalities eligible pursuant to the GDB Restructuring Act to receive a disbursement of 55% of Excess CAE have executed settlement agreements to receive such disbursements,” the release added.

Sobrino further said that another benefit of the transaction for municipalities is the “right for compulsory mediation pursuant to Act 109-2017, as amended, that protects municipalities from lawsuits from suppliers during a defined period.”

BofA Merrill Lynch acted as the lead solicitation agent and Barclays Capital Inc. acted as the co-solicitation agent for the solicitation.

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