Puerto Rico Electric bondholders offer to prefund bonds, push deadline

By Wendy Van Sickle

Columbus, Ohio, May 9 – The Puerto Rico Electric Power Authority (PREPA) bondholder group offered Monday to prefund the purchase price of the 2016 bonds that the group agreed to buy under the bond purchase agreement to facilitate the completion of the restructuring support agreement with PREPA, according to a press release.

Under the terms of the offer, the bond purchase agreement deadline would be extended until the earlier of the passage of an amendment by the Puerto Rico legislature excluding PREPA as a restructuring support agreement party from the Moratorium Act or May 31.

The bondholder group is prepared to deposit the approximately $61 million to fund the bond purchase agreement into escrow or other segregated accounts.

Under the arrangement, the funds would be transferred to the PREPA bond trustee following the passage of legislation, which would address issues created by the Moratorium Act preventing the consummation of the bond purchase agreement, and the satisfaction of other agreed-upon precedent conditions, according to the release.

“We continue to be supportive of PREPA and the Puerto Rico legislative process, which is why we are offering to remove a degree of risk and uncertainty by depositing this money up front,” Stephen Spencer, financial adviser to the PREPA bondholder group, said in the release.

“We are willing to extend the time to consummate the [bond purchase agreement], because we understand that additional time may be needed to pass the necessary legislation, and we are confident that extending through the end of the month provides that. We look forward to continuing to work with PREPA to complete the fair deal we have struck, which will benefit citizens in Puerto Rico and all PREPA stakeholders.”

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