GDB debt recovery arm, collateral monitor & servicer oppose PRIDCO’s voluntary restructuring
By The Star Staff
The Government Development Bank’s (GDB) Debt Recovery Authority (DRA), its collateral monitor and its servicer have come out against the Title VI voluntary restructuring of the Puerto Rico Industrial Development Corp. (PRIDCO).
PRIDCO’s qualifying modification does not clarify where its planned $30 million upfront cash payment is coming from, the collateral monitor and servicer argued in their objection.
Supposing that the money is coming from the DRA’s collateral or unencumbered PRIDCO property, the qualifying modification should be denied because the DRA has either a superior or equal claim to the money, according to the DRA, AmeriNational Community Services, which is the servicer for the GDB-DRA, and Cantor-Katz Collateral Monitor, which is the collateral monitor for the holders of bonds issued by the DRA.
“Fortunately, the DRA Parties’ Objection can be easily resolved via a consensual modification to the Proposed Approval Order to ensure that the PRIDCO QM (qualifying modification) will not permit an unjustified diversion of collateral from the DRA or other impairment of the DRA’s rights or interests in the PRIDCO Loans,” the entities argued. “If the (qualifying modification) proponents do not agree to such a modification, then the approval of the Application and the QM should be denied to ensure that the DRA’s rights and interests are not impaired, altered, or affected by this Title VI case.”
PRIDCO filed for Title VI bankruptcy in October to restructure $189.6 million in bond debt with no haircut, but with extended maturities.
Under the terms of the voluntary restructuring, which has the support of the majority of bondholders but must be approved by a court, bondholders would receive $30 million in cash and replacement debt for the rest of their bonds. The debt would carry coupons of 7.0% to 8.8% and the time PRIDCO had to repay would be extended.