Puerto Rico rejects financing, debt relief offer for power authority

By Caroline Salls

Pittsburgh, Sept. 28 – The Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF) rejected an offer from members of a Puerto Rico Electric Power Authority (Prepa) bondholder group to provide $1 billion of debtor-in-possession financing to Prepa and relief on existing bonds, according to a bondholder group news release.

Stephen Spencer of bondholder group financial adviser Houlihan Lokey said in the release, “We are disappointed by AAFAF’s and the governor’s outright rejection of our loan offer without any discussion or counter-proposal.

“We sincerely believed our loan would have helped Prepa finance its recovery and rebuilding efforts as quickly as possible in the wake of two terrible hurricanes.

“This offer was designed to support Prepa’s liquidity with new, immediate low-cost financing – with an interest rate set materially below market – and substantial debt service relief, including a permanent reduction in outstanding debt.

“Importantly, we believe this offer would have helped, not hurt, Prepa’s ability to obtain federal disaster funding relief based on the post-hurricane recovery experiences of other electric utilities such as Entergy New Orleans and the Long Island Power Authority and with expanded capital, would potentially reduce the time frame to restore power to the island.”

The Commonwealth of Puerto Rico announced its Title III petition filing on May 3. The case number in the U.S. Bankruptcy Court for the District of Puerto Rico is 17-03283.

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