Jun 25, 2024
Puerto Rico Utility’s Creditors Extend Fight for Broad Repayment
Bloomberg News
,![Puerto Rico Electric Power Authority (PREPA) employees fix power lines in Santurce, San Juan, Puerto Rico, on Thursday, Oct. 19, 2017. For longer than most can remember, Puerto Ricans have paid some of the highest energy costs in the U.S. to a notoriously unreliable utility that neglected their grid for years and runs fossil-fuel plants that may be damaging their lungs. A month after Hurricane Maria devastated the island, power lines still lay slack along roads, utility poles are snapped clean in half, and most Puerto Ricans remain in the dark. Photographer: Xavier Garcia/Bloomberg, Bloomberg Puerto Rico Electric Power Authority (PREPA) employees fix power lines in Santurce, San Juan, Puerto Rico, on Thursday, Oct. 19, 2017. For longer than most can remember, Puerto Ricans have paid some of the highest energy costs in the U.S. to a notoriously unreliable utility that neglected their grid for years and runs fossil-fuel plants that may be damaging their lungs. A month after Hurricane Maria devastated the island, power lines still lay slack along roads, utility poles are snapped clean in half, and most Puerto Ricans remain in the dark. Photographer: Xavier Garcia/Bloomberg](/polopoly_fs/1.2089421.1719348797!/fileimage/httpImage/image.jpg_gen/derivatives/landscape_620/puerto-rico-electric-power-authority-prepa-employees-fix-power-lines-in-santurce-san-juan-puerto-rico-on-thursday-oct-19-2017-for-longer-than-most-can-remember-puerto-ricans-have-paid-some-of-the-highest-energy-costs-in-the-u-s-to-a-notoriously-unreliable-utility-that-neglected-their-grid-for-years-and-runs-fossil-fuel-plants-that-may-be-damaging-their-lungs-a-month-after-hurricane-maria-devastated-the-island-power-lines-still-lay-slack-along-roads-utility-poles-are-snapped-clean-in-half-and-most-puerto-ricans-remain-in-the-dark-photographer-xavier-garcia-bloomberg.jpg)
(Bloomberg) -- A group of bondholders and insurers of Puerto Rico Electric Power Authority debt extended a cooperation agreement to oppose the bankrupt utility’s proposal to drastically reduce its obligations.
Assured Guaranty, Syncora Guarantee and GoldenTree Asset Management, along with an ad hoc group of investors including Invesco Advisers Inc. and MacKay Shields LLC, continued to Sept. 30 a pact to work together in their negotiations with Puerto Rico’s financial oversight board, the manager of the utility’s bankruptcy, according to a court filing.
The creditors collectively hold or insure more than 49% of the electric utility’s $8.3 billion of outstanding bonds, according to the court filing. Prepa, as it’s called, has been in bankruptcy for seven years.
The extension follows a ruling last month by the US Court of Appeals for the First Circuit that determined that bondholders have a lien on Prepa’s future net revenue, reversing US District Court Judge Laura Taylor Swain’s decision that their lien was limited to reserve accounts. The First Circuit also ruled that investors’ allowed claim is the face value of the utility’s bonds plus matured interest, which is larger than the $2.4 billion cap that Swain determined.
Swain is set to hold a status conference on July 10 to discuss what further submissions or litigation may be necessary given the First Circuit’s ruling. The financial oversight board’s restructuring plan aimed to cut Prepa’s obligations by 75%, but that proposal will need to be altered or revamped given the First Circuit’s decisions.
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