SAN JUAN, Puerto Rico – Puerto Rico’s financially struggling power utility is aiming to finalize a restructuring deal on its nearly $9 billion debt next week after creditors extended a forbearance agreement until Tuesday.
Puerto Rico Electric Power Authority officials said late Friday that the extension would give it additional time to finalize a preliminary agreement with a group of bondholders and bank lenders that calls for 15 per cent discount on its debt. The utility known as PREPA is also in discussions with a group of monoline bond insurers on a separate restructuring deal.
“This extension affords us additional time to continue constructive negotiations with our key creditors,” PREPA Board Chairman Harry Rodriguez said. “Working with our creditors to restructure PREPA’s debt is an important component of our comprehensive plan that shares the burden of addressing PREPA’s finances among all stakeholders.”
Utility officials have said they need to reach a deal with monoline insurers in order for agreements with bondholders and bank lenders to survive. In September, the insurers declined to extend their forbearance agreement with PREPA but have not sued and continue in talks on a restructuring accord.
Legislation is also required to execute a restructuring agreement, and officials said it would be filed next week. Power utility union leaders have vowed to fight against passage of the legislation, which they say eliminates acquired rights of workers and opens the door to privatization of the public utility.
The utility has been in talks with creditors since August 2014. It is the first of about a dozen of Puerto Rico’s bond-issuing entities that is seeking concessions from creditors after Gov. Alejandro Garcia Padilla announced last June that the commonwealth government’s $72 billion is not payable.
This story has been corrected to show that the power utility is not bankrupt.