Puerto Rico Utility Said to Ask for Two More Weeks in Debt Talks

  • Bond insurers said to be waiting for Prepa counterproposal
  • Forbearance contract set to expire at midnight Friday

Puerto Rico’s main power provider has asked creditors for two more weeks to negotiate how to restructure $8.3 billion of bonds, according to two people with direct knowledge of the discussions.

A forbearance agreement that keeps the discussions private and out of court between the Puerto Rico Electric Power Authority and bondholders, banks and insurance companies, is set to expire late Friday. The utility, referred to as Prepa, is seeking to extend the pact for an eighth time since talks began over a year ago, according to the two people, who asked for anonymity because the discussions are private.

Prepa first signed the forbearance in August 2014 with its creditors after the agency used its capital budget to pay for fuel. The utility reached a tentative agreement on Sept. 1 with bondholders including OppenheimerFunds Inc., Franklin Advisers Inc., BlueMountain Capital Management and Goldman Sachs Group Inc., to take losses of about 15 percent in a debt exchange.

Bond insurers Assured Guaranty Ltd. and MBIA Inc. last week offered a proposal that doesn’t include exchanging insured Prepa debt at a discount, according to a person with direct knowledge of the monoline proposal. That would fit into the tentative plan with forbearing bondholders, the person said, without elaborating. Prepa has yet to respond to the bond insurers’ proposal, the person said.

Greg Diamond, a spokesman for MBIA, Ashweeta Durani, a spokeswoman for Assured, and Michael Corbally a spokesman at Syncora Guarantee Inc. declined to comment.

Jose Echevarria, a spokesman in San Juan for Prepa, and Jenni Main, chief financial officer at Millstein & Co., an adviser on the utility’s restructuring, declined to comment.

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