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Highway authority plan of adjustment gains Title III court approval


U.S. District Court Judge Laura Taylor Swain

By The Star Staff


U.S. District Court Judge Laura Taylor Swain, who is overseeing Puerto Rico’s Title III bankruptcy cases, confirmed on Wednesday the plan of adjustment for the Highway and Transportation Authority (HTA), taking the island a step closer to the restructuring of its finances.


Swain approved the fifth version of the plan, submitted last month, which reduces HTA’s $6.4 billion in claims by more than 80%.


The confirmation of the plan is an important step for Puerto Rico to end its bankruptcy process under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), and to achieve long-term economic stability and growth, the Financial Oversight and Management Board said.


It is one of several debt adjustment plans confirmed by the court.


On Nov. 7, 2018, the court approved a qualifying modification for the Government Development Bank for Puerto Rico that restructured some $4.5 billion in claims against the GDB.


On Jan. 18 of this year, the court confirmed the Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, dated Jan. 14, 2022, for the commonwealth, the Employees Retirement System and the Puerto Rico Public Buildings Authority, which reduced the commonwealth’s $30.5 billion in general obligation and guaranteed debt to some $7.4 billion, and eliminated all of the Employees Retirement System and Public Buildings Authority’s debt.


On Jan. 20, the court approved a qualifying modification for the Puerto Rico Infrastructure Financing Authority (PRIFA) restructuring some $1.9 billion in claims against PRIFA and approved a qualifying modification for the Puerto Rico Convention Center District Authority that restructured some $384 million in claims against that authority.


The government also restructured the debt of the Puerto Rico Sales Tax Financing Corp.


Under the most recent restructuring to gain Title III court approval, HTA must establish a toll management office that is exclusively responsible for toll roads, separate responsibility for construction and maintenance between toll roads and non-toll roads, and transfer the Urban Train (Tren Urbano) to the Puerto Rico Integrated Transit Authority.


Those reforms are designed to create operational stability and improve the transportation sector overall.


The HTA Plan also requires HTA, during all times in which new HTA bonds (or refinancings thereof) remain outstanding, to maintain and comply with a debt management policy that imposes certain limitations on further borrowing after the plan becomes effective.


The HTA 2022 Fiscal Plan is expected to provide for sufficient revenue to satisfy debt service to bondholders through modest increases in tolls and revenue from fines while maintaining significant cash reserves.


The plan contains 20 classes of creditors, of which the first 14 consist of bond claims, including monoline insurers. Class 15 consists of eminent domain payments.


The plan also calls for the preemption of local laws enacted prior to June 30, 2016 that provide for transfers or appropriations after the enactment of PROMESA, including transfers from the commonwealth or one of its instrumentalities to any agency or instrumentality, whether to enable such agency or instrumentality to pay or satisfy indebtedness or for any other purpose to the extent inconsistent with the HTA plan’s discharge of the debtor’s obligations.


All entities who have held, hold or may hold claims against HTA are prevented from pursuing claims that were discharged.


Meanwhile, Popular Democratic Party Sen. Juan Zaragoza Gómez filed legislation for the restructuring of the Puerto Rico Electric Power Authority that includes a 60% haircut on the utility’s debt, according to a radio report.


The objective of the Zaragoza bill is to establish certain conditions to regulate the outcome of the restructuring procedure, since, in his opinion, it is necessary to guarantee that the utility will be a solvent company at the end of the process, according to the report.

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