Deadline is Nov. 12 to vote on petition to restructure $1.5 billion in Public Finance Corp. debt
By The Star Staff
Nov. 12 is the deadline to vote on a qualifying modification petition filed recently in bankruptcy court to restructure over $1.5 billion in Public Finance Corp. debt.
On Oct. 25, the Fiscal Agency and Financial Advisory Authority on behalf of the Puerto Rico Public Finance Corp. (PFC), and the Financial Oversight and Management Board, launched the solicitation of a qualifying modification for PFC pursuant to Title VI of the Puerto Rico Oversight, Management and Economic Stability Act, according to an oversight board document.
On Oct. 28, the oversight board, as the Title VI administrative supervisor, also commenced a Title VI proceeding in the bankruptcy court by filing an application seeking approval of the qualifying modification. The deadline to vote on the qualifying modification is Nov. 21.
The qualifying modification involves the restructuring of the several bonds series issued by the PFC.
The first is Series 2011A Commonwealth Appropriation Bonds, the second is Series 2011B Commonwealth Appropriation Bonds, and the third is Series 2012A Commonwealth Appropriation Bonds.
Those participating bonds are payable solely from payments of principal and interest on certain promissory notes issued by certain departments, agencies, instrumentalities and public corporations of the Commonwealth of Puerto Rico, which are payable solely from budgetary appropriations made by the Puerto Rico Legislative Assembly.
If the requisite votes are received and the qualifying modification is approved by the bankruptcy court and implemented, the qualifying modification will result in the discharge of the participating bonds at a significant discount. In particular, the only new economic consideration required to be provided by the commonwealth or the PFC to discharge the more than $1.5 billion, including principal and unpaid interest of participating bonds, is through payment of $13.8 million in cash.
The remaining consideration, subject to and as provided under the qualifying modification, will be in the form of bonds issued by the Government Development Bank Debt Recovery Authority in the face amount of up to some $47 million.
In addition, if consummated, the qualifying modification will result in the release of all claims against the agencies and public corporations that issued the notes. That would allow the notes’ liability that is currently carried on the balance sheets of multiple government agencies and public corporations to be eliminated.