(Bloomberg) – Puerto Rico’s Financial Supervisory Commission is considering cutting by about half the amount of new bonds it claims its failed island power company can repay, but bondholders reject it. This could result in the issuance of bonds with a high probability.
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A federally appointed board says Puerto Rico’s power utility, called Prepa, has only $2.5 billion to repay creditors, half the $5.68 billion offered in its debt restructuring plan in March. I estimate that it is not enough. That’s well below $10 billion in debt, including nearly $9 billion to bondholders and fuel line lenders.
The board of directors overseeing Prepa’s bankruptcy said in a statement late Friday that a steeper-than-expected drop in energy consumption and higher costs meant that the amount of debt the utility could pay off over the long term was significantly higher than previously proposed. said it should be reduced. After approving the power company’s multi-year financial plan.
“Sustainability is the guiding principle of any debt restructuring,” said board chairman David Skeel in a statement. “The goal is to stabilize Prepa. are doing.”
Puerto Rico governor to revise plan to cut utility debt
A reduced repayment amount would likely make the bankruptcy process even more controversial and lengthy to resolve. A special group of bondholders is arguing in court that Prepa could pay more to the board’s recent $5.68 billion proposal, and formal mediation talks between the parties are pending. I’m stuck.
A judge overseeing the nearly six-year bankruptcy on Wednesday canceled an approval hearing on its debt plan scheduled for July after the board said it needed more time to revise the plan.
Public Hearing on Puerto Rico Power Company Debt Reduction Plan Postponed
More residents are upgrading to energy-efficient appliances, and some are installing solar panels to reduce their dependence on the island’s fragile and neglected power grid, the board said in a statement. Some say there are. These changes reduce energy consumption.
Restructuring Prepa’s duties is difficult. While bondholders haven’t been paid in years, residents are already plagued with some of the most expensive and unreliable electricity in the country.
“We are not ready,” said Robert Mujica, executive director of the board, in a statement. “Electricity is still unreliable. But the basic building blocks are in place. The implementation of financial planning to date has created an energy system that can improve over time.”
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