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Puerto Rico’s Government Development Bank nixes exchange offer plans
By Angela McDaniels
Tacoma, Wash., Oct. 21 – The Government Development Bank for Puerto Rico will not move forward with a proposed exchange offer for its notes, according to a government announcement.
Informal discussions between the bank and an ad hoc group of bondholders about the exchange offer and a potential financing transaction have ended.
Under the proposed exchange offer, the bondholders would have exchanged $850 million of bonds for new 8˝% senior notes at prices equal to 130% of market value and purchased additional new 8˝% notes for $750 million in cash at a discount to yield 10%.
The new notes would have been issued by the Puerto Rico Infrastructure Financing Authority and guaranteed by the Commonwealth of Puerto Rico and structured as term bonds maturing in 2020, 2025, 2030, 2035 and 2037.
In addition, the bondholders had planned to consent to an amendment that would have deleted some events of default and the acceleration provision in the indentures governing the existing bonds.
The bank and the Working Group for the Fiscal and Economic Recovery of Puerto Rico continue to focus on implementing the broader, comprehensive voluntary exchange offer for all Puerto Rico creditors, including those owning the bank’s notes.
“While we are disappointed that we were unable to reach a constructive and mutually beneficial agreement with the ad hoc group of GDB creditors, the GDB and the Working Group continue to make progress towards a comprehensive voluntary exchange offer that addresses the commonwealth’s indebtedness in a holistic manner and through which creditors across the commonwealth will agree to amended payment terms through consensual negotiations,” Government Development Bank president Melba Acosta said in the announcement.
Acosta said the bank has begun the process of signing non-disclosure agreements and initial due diligence with a number of creditors.
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