Puerto Rico government bank inks restructuring terms, support deal

By Caroline Salls

Pittsburgh, June 16 – The Commonwealth of Puerto Rico said in a status report filed Friday with the U.S. Bankruptcy Court for the District of Puerto Rico that the Government Development Bank of Puerto Rico has negotiated a term sheet and restructuring support agreement with its bondholders and non-commonwealth affiliated depositors.

The agreement was reached in coordination with the Puerto Rico Fiscal Agency and Financial Advisory Authority.

According to the report, the restructuring support agreement calls for a wind-down of the bank and its assets, with returns from those assets to be used to fund recoveries to creditors.

In exchange for current bonds and non-governmental deposit claims, new bonds will be issued by a special purpose vehicle in a securitization structure and without recourse to the bank.

The Financial Oversight and Management Board for Puerto Rico said nearly 50% of affected creditors have already signed on to the bank’s restructuring support agreement.

As a result, the bank has expressed a desire to pursue a qualifying modification through a voluntary agreement process, the report said, and it intends to submit a proposed modification to the oversight board for certification as such within the coming weeks.

Puerto Rico announced its Title III petition filing on May 3. The case number is 17-03283.

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