Oversight Board to change debt adjustment plan, may reduce PREPA’s debt
By The Star Staff
Title III Bankruptcy Judge Laura Taylor Swain issued several orders Sunday after the Financial Oversight and Management Board (FOMB) informed the court of its intention to change the Puerto Rico Electric Power Authority’s (PREPA) debt adjustment plan after reviewing new information received from the utility and its private operators, LUMA Energy, and Genera PR.
The FOMB filed an informative motion in the U.S. District Court last week stating that the revision of PREPA’s fiscal plan, which was slated to be certified June 16 and is needed for the debt plan, was set back by the Board’s receipt and review of the new information.
These changes may delay the confirmation hearing of PREPA’s debt restructuring plan next month. It also is an indication that the FOMB may propose further cuts to PREPA’s debt. The current debt plan cuts it to about $5.68 billion, an amount that bondholders have already said is too low.
“The FOMB said it believes it is in all parties’ best interests that it simultaneously certify the 2023 PREPA Fiscal Plan and specify any necessary amendments to the Plan of Adjustment. Therefore, the Oversight Board informed the court that it could not responsibly certify the 2023 PREPA Fiscal Plan by its anticipated deadline of June 16, 2023,” the FOMB said.
“The Oversight Board is committing by no later than Friday, June 23, 2023 to certify the 2023 PREPA Fiscal Plan and to identify any necessary amendments to the Plan of Adjustment,” the Board added.
The FOMB said the amendments to the fiscal plan may or may not require solicitations “but given the proximity of the confirmation hearing’s commencement date, it is likely the Oversight Board (and other parties) may seek to change the confirmation schedule based on these developments, especially the June 26, 2023 deadline for witness declarations because any amendments could impact witness declarations,” the Board said.
The Oversight Board also asked the Court to extend the deadline for the court’s requested status report on the 2023 PREPA Fiscal Plan from June 21, 2023, to June 28, 2023.
According to the FOMB, the entire process was set back by the FOMB’s receipt and review of new information that came from outside the Oversight Board from, among others, PREPA, LUMA Energy, Genera PR, and the various parties’ advisors, including Ankura Consulting Group, LLC, and Siemens AG.
Swain ordered the Oversight Board to meet and confer with counsel for the objectors of the debt deal as soon as practicable after the 2023 PREPA Fiscal Plan is certified, and in no event more than 24 hours thereafter subject to the parties’ availability.
The Oversight Board was directed to upload to the Plan Depository the model and other source data supporting the 2023 PREPA Fiscal Plan as soon as it is available. Swain granted the Oversight Board’s request for adjournment of the filing deadline for the joint Status Report to June 28, 2023.
The Oversight Board was directed to meet and confer with counsel for the objectors and to file a joint status report by 2:00 p.m. on June 21, 2023, concerning whether and to what extent the parties believe that confirmation-related dates and deadlines should be altered or suspended in advance of the Oversight Board’s Status Report.
At a hearing earlier this month, Martin Bienenstock had told the court that new data show that energy consumption is declining more than anticipated. The Oversight Board and its financial advisers were reviewing whether the new load information changes projections for the future that would impact debt sustainability, he said.
Prepa has been in bankruptcy since 2017 to restructure some $10 billion in debt