- Forbearance agreement deadline pushed back by two days
- Prepa is seeking to restructure $8.3 billion of debt
The Puerto Rico Electric Power Authority, the island’s main electricity provider, gained two more days from bondholders to negotiate how to restructure $8.3 billion of debt, the agency said.
The utility, known as Prepa, faces a $196 million interest payment due Jan. 1. Investors holding about 35 percent of the agency’s bonds and its fuel lenders decided to delay until Nov. 5 the expiration of a forbearance agreement that was set to end Tuesday, Jose Echevarria, a spokesman in San Juan for Prepa, said in a statement. The contract keeps debt restructuring talks out of court. This is the 13th extension since the parties first signed the accord in August 2014.
“PREPA will use the extension to finalize its agreements with the forbearing creditors and continue discussions with its monoline bond insurers,” Echevarria said.
Bondholders and fuel lenders are in talks with Prepa to finalize a tentative agreement the parties reached in September that asks investors to take a 15 percent loss in a debt exchange. Such a transaction requires legislative approval. Governor Alejandro Garcia Padilla’s administration plans to file such a bill “shortly” Jesus Manuel Ortiz, a spokesman for the governor, told reporters in San Juan on Monday.
The utility’s also negotiating with insurance companies that guarantee repayment of about $2.5 billion of debt if the utility defaults. The insurers are considering including in the debt exchange an instrument that would provide liquidity, according to a person familiar with the discussions who asked for anonymity because the talks are private. It’s unclear whether the Prepa can execute a restructuring plan if the insurers don’t back it.