Puerto Rico Electric Gets Negotiation Extension From Bondholdersby
Forbearance agreement deadline pushed back to next week
Prepa is seeking to restructure $8.3 billion of debt
Puerto Rico’s main electric utility gained a few more days from bondholders to negotiate how to restructure $8.3 billion of debt.
Investors holding about 35 percent of the Puerto Rico Electric Power Authority’s debt decided to delay until Nov. 3 the expiration of a forbearance agreement that was set to end Friday, the agency said in a statement. The contract keeps debt restructuring talks out of court. This is the 12th extension since the parties first signed the accord in August 2014.
The extension comes as bondholders and fuel lenders may sign next week an agreement with Prepa, as the agency is known, after reaching a tentative plan in September, Jose Echevarria, a spokesman in San Juan for the utility, said earlier Friday. That potential plan involves investors taking a 15 percent loss in a debt exchange.
Prepa is 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 plan to reduce its debts if the insurers don’t back it.