AAFAF pulls its objection to highway authority debt reorganization

The Fiscal Agency and Financial Advisory Authority’s objection to the Highways and Transportation Authority’s plan of adjustment, which is on its fifth version, had to do with changes to HTA’s operational structure, which will be reduced.

By The Star Staff

The Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish initials) on Saturday withdrew its limited objection to the bankrupt Highways and Transportation Authority’s debt reorganization.

The AAFAF’s objection to the plan of adjustment, which is on its fifth version, had to do with changes to HTA’s operational structure, which will be reduced. The final version of the HTA plan of adjustment states that upon approval of the U.S. Department of Transportation’s Federal Transit Administration, the reorganized HTA will separate the highway assets from the transit assets, and then transfer the transit assets to PRITA, the Puerto Rico Integrated Transit Authority.

After 15 months, the highway assets will be operationally and financially separated between toll road assets and non-toll road assets, with a “Ring-Fenced” structure and allocation of cost and expenses implemented, including, without limitation, the internal separation of legal, financial and operational functions and the establishment of separate toll road assets and non-toll road assets management offices.

All HTA retirees will be paid by way of the commonwealth pay-as-you-go mechanism.

The AAFAF had said the debt adjustment plan could not require the HTA to take on certain functions of different government agencies, could not require non-debtor governmental agencies to take on functions of the HTA, and should not include provisions that govern operations of a governmental non-debtor that performs vital functions in the transportation sector.

The AAFAF, however, said it reached an agreement with the Financial Oversight and Management Board last week allowing for HTA’s expeditious emergence from Title III bankruptcy. The modifications, the AAFAF said, are reflected in the latest plan of adjustment, which may be confirmed Wednesday, and was filed on Saturday.

Under the plan of adjustment, the HTA, which has been in Title III bankruptcy since 2017, would restructure about $6.4 billion in claims against the HTA. The plan cuts the HTA’s outstanding debt by more than 80%, to $1.2 billion, and saves Puerto Rico more than $3 billion in debt service payments.