Wed | Nov 29, 2023

Court ruling advances plan to restructure Puerto Rico power company debt

Published:Friday | November 17, 2023 | 12:07 AM
Workers restore power lines damaged by Hurricane Maria in Barceloneta, Puerto Rico in October 2017.
Workers restore power lines damaged by Hurricane Maria in Barceloneta, Puerto Rico in October 2017.

A federal judge on Tuesday tentatively approved a portion of the newest plan to restructure US$10 billion of debt owed by Puerto Rico’s power company amid heated negotiations between creditors and the United States territory’s government.

The overall debt restructuring plan has been amended four times this year by a federal control board that oversees Puerto Rico’s finances. A confirmation hearing is set for March 2024 as various bondholders continue to oppose the plan.

The board did not have an immediate comment on the judge’s decision regarding the plan’s disclosure statement, which requires modifications before bondholders vote on it. The decision was issued after an hours-long hearing that drew protesters to the courthouse who are opposed to electric bill increases outlined in the plan.

The bankruptcy of Puerto Rico’s Electric Power Authority has dragged on for years amid intense debate on how to restructure its debt — the largest of any government agency in the US territory.

Numerous restructuring attempts have failed, with several creditors seeking to recuperate more money than what the plan currently offers. The plan was amended for a third time in August and a fourth time over the past weekend.

The newest proposal seeks to cut the power company’s debt by nearly 80 per cent, to some US$2.5 billion. If approved, it is expected to lead to increases in residential and commercial power bills that already are among the highest of any US jurisdiction.

The power company is Puerto Rico’s only agency that has yet to restructure its debt since the territory’s government announced in 2015 that it was unable to pay its more than US$70-billion public debt, accumulated through decades of mismanagement, corruption and excessive borrowing. In 2017, Puerto Rico filed for the biggest US municipal bankruptcy in history.