Sep 29, 2017   SOURCE: BusinessWire

PREPA Bondholder Group Comments on AAFAF Rejection of $1 Billion Loan Offer

The Puerto Rico Electric Power Authority (PREPA) Bondholder Group today commented on the statement from the Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”) rejecting the Bondholder Group members’ offer of a debtor in possession (DIP) financing loan to PREPA including $1 billion in new cash from the bondholders, as well as relief on existing bonds.

Stephen Spencer of Houlihan Lokey, the PREPA Bondholder Group’s financial advisor, said:

“We are disappointed by AAFAF’s and the Governor’s outright rejection of our loan offer without any discussion or counter-proposal. We sincerely believed our loan would have helped PREPA finance its recovery and rebuilding efforts as quickly as possible in the wake of two terrible hurricanes.

This offer was designed to support PREPA’s liquidity with new, immediate low-cost financing – with an interest rate set materially below market – and substantial debt service relief, including a permanent reduction in outstanding debt. After a lack of communication from PREPA, we wanted to ensure that they knew funding was available if needed. Importantly, we believe this offer would have helped, not hurt, PREPA’s ability to obtain Federal disaster funding relief based on the post-hurricane recovery experiences of other electric utilities such as Entergy New Orleans and the Long Island Power Authority, and with expanded capital, would potentially reduce the time frame to restore power to the Island.

Our group’s members include firms that have had relationships in Puerto Rico for many decades. We are all concerned with the well-being of the Americans that live in Puerto Rico and we continue to look for ways to engage with the Commonwealth and work collaboratively in the ongoing recovery effort.”