Major PREPA creditor joins call for a mediator to broker restructuring plan
By The Star Staff
National Public Finance Guarantee, one of the Puerto Rico Electric Power Authority’s (PREPA) largest creditors, joined the call made by another creditor group that asked the federal Title III court for a mediator to broker a restructuring plan for the utility and the imposition of deadlines to complete the debt adjustment.
PREPA has been in bankruptcy since 2017 to restructure $9 billion in debt.
Under the current restructuring support agreement (RSA), legislative approval of a bond securitization package is necessary. Although the island Legislature enacted nearly identical legislation in 2016 to implement the RSA’s predecessor, which consisted of a securitization structure with a dedicated transition charge for debt service, it is not willing to do so again.
“In light of current political realities, the Oversight Board has stated, and National agrees, that an alternative option is necessary to implement the RSA. But time is of the essence to accomplish this task,” the monoline said. “PREPA’s Title III case has been pending far too long. The Oversight Board’s current Executive Director, Natalie Jaresko, has just six weeks left of her tenure. Court-ordered mediation, led by Judge Barbara Houser, who National understands is willing to serve as mediator, is the surest way to negotiate a consensual amendment to the RSA within the time allocated and move PREPA out of Title III in the coming months.”
National insured more than $1.8 billion of PREPA bonds. When PREPA’s financial condition deteriorated, National negotiated and joined the original restructuring support agreement in 2015. As it became necessary to support PREPA’s recovery still further, National extended forbearance agreements repeatedly, altered milestones, and provided funding to PREPA by purchasing relending bonds on three separate occasions.
“National also has continued to pay claims for principal and interest under PREPA bonds,” the bond insurer said. “National negotiated and joined the current RSA and continues to fully support it. Indeed, the RSA represents the culmination of years of prior negotiations spanning several Commonwealth administrations.”
Accordingly, National said it wants to join the Ad Hoc Group of PREPA Bondholders’ motion and requests that the court enter orders appointing Houser as mediator, and setting deadlines for a PREPA plan of adjustment by April.