Puerto Rico power company reaches new deal with creditors
Puerto Rico's power company said Thursday that it reached a new deal with bondholders as it seeks to restructure roughly US$9 billion in debt.
The agreement calls for legislators to approve a measure by February 16 needed to launch the restructuring of the largest United States public power utility.
The Puerto Rico Electric Power Authority bondholder group said it and other creditors would provide US$111 million through the purchase of new bonds. It said half the notes would be issued once the bill is passed and the other half once the securitisation structure is submitted to an energy commission.
The power company said the deal requires bondholders and monoline insurers to buy 50 per cent of the bonds once the bill is approved.
The announcement comes just days after the original deal collapsed when legislators missed a Friday deadline to approve the bill. The agreement still involves only those holding 70 per cent of the power company's debt.
"We have a long way to go, and there remain many uncertainties; but if implemented PREPA's transformation will have a positive, lasting impact on its finances, operations and culture," said Lisa Donahue, chief restructuring officer.
Officials have warned that without debt restructuring, the company will run out of cash by summer, possibly leading to power cuts.
Puerto Rico is struggling with US$72 billion in public debt that the governor has said is unpayable and needs restructuring. The power company's deal has been considered a potential model for other debt-restructuring negotiations involving Puerto Rico's public agencies.