Group of PREPA bondholders hires its own law firm for utility’s bond restructuring
By The Star Staff
Calling itself the Majority Member PREPA Ad Hoc Group, a set of Puerto Rico Electric Power Authority (PREPA) bondholders has hired its own law firm to represent them in the bond restructuring of the utility’s bankruptcy process, according to a statement issued earlier this week.
Since 2014, Kramer Levin Naftalis & Frankel has been representing the Ad Hoc Group of PREPA Bondholders. On or about May 1, certain funds managed or advised by Blackrock Financial Management Inc. retained Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul, Weiss) to represent them in connection with a potential restructuring of certain bonds. On or about Aug. 8 and Aug. 9, certain funds managed or advised by Nuveen Asset Management LLC, Franklin Advisers Inc. (“Franklin”), Taconic Capital Advisors LP, and Whitebox Advisors LLC contacted Paul, Weiss seeking separate representation. Those five members then engaged Paul, Weiss to represent them as a group in connection with a potential restructuring of the bonds, according to the statement issued Wednesday.
The group, which calls itself the Majority Member PREPA Ad Hoc Group, holds $2.4 billion in uninsured debt. All members are also part of the ad hoc bondholders group, represented by Kramer Levin Naftalis & Frankel, that has about $3.6 billion in uninsured debt as of Aug. 14, according to a recent court disclosure.
The news comes amid claims that PREPA, which has been in bankruptcy since 2017 to restructure some $9 billion in debt, is reportedly closing in on a deal with at least two bondholders, BlackRock Financial Management and Taconic Capital Advisors.
The Financial Oversight and Management Board has yet to file an amended plan of adjustment after reaching an agreement in principle with “substantial amounts of PREPA bonds.” GoldenTree Asset Management, a member of the original ad hoc group, has disclosed that it is not participating in the talks for restructuring. The oversight board should be filing its third amended plan of adjustment on Friday.