Delay sought for hearing on Puerto Rico electric utility debt restructuring

Puerto Rico is seeking more time to obtain approval from a US District Court to restructure more than US$8 billion of bonds issued by the country’s bankrupt electric utility company.

An agreement was reached to restructure the bonds but attorneys for Puerto Rico’s federally created financial oversight board wants more time to execute the agreement.

Attorney, Martin Bienenstock, representing Puerto Rico financial oversight board told U.S. District Court Judge, Laura Taylor Swain that his client is seeking another postponement for a March 31 hearing on the deal. The request was made although lawyers for two bond insurance companies said they would oppose the delay.

A board representative said the oversight body wants to ensure that the Puerto Rican legislature has sufficient time to consider and pass legislation needed to implement the agreement.

The court hearing will take up a restructuring support agreement (RSA) reached with a majority of creditors in September that moved the Puerto Rico Electric Power Authority (PREPA) closer to exiting a form of bankruptcy filed in July 2017.

The deal would reduce PREPA’s debt by up to 32.5%, but its imposition of higher charges on the utility’s customers has sparked concerns in the Puerto Rican legislature. While Bienenstock said the board remains “hopeful that legislation would be submitted within the next weeks,” he warned “it is not exact science” when and if the island’s lawmakers would approve the deal.

Bienenstock also said the oversight board is reviewing a request by 13 members of Congress to renegotiate the PREPA RSA in the wake of a series of earthquakes that shook the island since late December.

Meanwhile, a proposal to restructure US$35 billion of core government bonds and claims and more than $50 billion of pension liabilities remains on course, despite the most recent events.

Leave a Reply