Oversight Board to submit new PREPA debt deal no later than March 17

FOMB executive director Robert F. Mujica Jr.

By The Star Staff

After filing on February 6 the energy utility’s fiscal plan, the Financial Oversight and Management Board (FOMB) says it expects to submit an amended plan of debt adjustment for the Puerto Rico Electric Power Authority by no later than March 17.

PREPA has been in Title III bankruptcy since 2017 to restructure about $9 billion in debt.

In a motion last week, the FOMB said the new debt adjustment plan will be consistent with PREPA’s fiscal plan.

The FOMB has clarified that the proposed amended plan will fully cover the non-settling bondholders’ secured claim, provided that the amount is determined to be allowable. Additionally, all administrative claims will be paid, as long as the Court establishes that these claims are valid and can be paid using assets not connected to the bondholders’ collateral.

“The proposed amended plan will pay in full the non-settling bondholders’ secured claim in the amount it is determined to be finally allowable and all their administrative claims to the extent the Court determines they have allowable, recourse administrative claims payable from assets other than their collateral. In its response to be filed next week, the Oversight Board will briefly explain why it believes such claims are not meritorious for legal reasons determinable prior to any legitimate need for discovery and evidentiary hearings,” the FOMB said.

In a response set to be filed next week, the FOMB will explain why it believes that these claims have no legal basis for receiving additional payments beyond what the proposed plan offers. This viewpoint is based on legal reasons that can be determined without requiring extensive discovery and evidentiary hearings.

The Oversight Board also said that in a response to the bondholders’ motion dated February 24 for an order terminating the litigation stay, it will address the bondholders’ comments about the February 2025 PREPA Fiscal Plan.

A group of Puerto Rico Electric Power Authority bondholders want Judge Laura Taylor Swain to lift the litigation stay, arguing that the energy utility refuses to accept their latest settlement offer in the bankruptcy process that began in July 2017.

Assured Guaranty Inc., the PREPA Ad Hoc Group, National Public Finance Guarantee Corporation, GoldenTree Asset Management LP, Syncora Guarantee, Inc., and U.S. Bank National Association as trustee under the Trust Agreement moved to terminate the PREPA litigation stay and used statements against the fiscal plan made by La Fortaleza Chief of Staff Francisco Domenech and by the governor in support of their claims.

They argued the FOMB, which represents PREPA in its $9 billion bankruptcy, eliminated any reasonable basis for maintaining a stay.

The bondholders noted that even the Commonwealth recognizes that the Board is acting in bad faith, as the executive director of AAFAF, Francisco Domenech, on behalf of the new administration, stated that the Board’s actions are “unacceptable,” and that the fiscal plan is based on projections that are neither “real nor reasonable.”