Highway authority debt plan takes effect with 80% reduction
By The Star Staff
The plan of adjustment for the Puerto Rico Highways and Transportation Authority (HTA) that reduces HTA’s $6.4 billion debt by more than 80% became effective this week, according to court documents.
The plan, which went into effect Tuesday, creates “a solid financial foundation to ensure Puerto Rico’s roads and public transportation system are maintained and improved,” the Financial Oversight and Management Board said.
“HTA will now be able to implement the transportation sector reforms set forth in the certified HTA and Commonwealth Fiscal Plans,” the board said.
“HTA’s exit from bankruptcy is essential to build and maintain safe roads,” said David Skeel, the oversight board chairman. “The Plan of Adjustment together with the comprehensive transportation sector reform defined in the Fiscal Plan puts Puerto Ricans at the center of infrastructure development, improvements in safety, and traffic congestion management.”
The annual debt service decreases substantially, from $294 million before the debt restructuring to $90 million annually over the term of the bonds, saving Puerto Rico more than $3 billion in debt service payments. The financial stability of the plan of adjustment allows the HTA to invest more in roads and other projects.
The HTA completed the exchange of more than $6.4 billion in existing bonds and other claims to $1.2 billion in new bonds. In addition, HTA bondholders received $389 million in cash. The first of two $24 million cash deposits were made to a reserve for the benefit of general unsecured creditors. The plan had been confirmed in October by the federal Title III bankruptcy court.
The plan will also result in an overhaul of the HTA as the island’s toll roads will be put under private management.