By The Star Staff
Puerto Rico Electric Power Authority (PREPA) bondholders are using Gov. Pedro Pierluisi Urrutia’s own words to prove that the utility can pay more of its debt than it has let the bankruptcy court know, according to a motion filed this week.
During a recent PREPA bankruptcy hearing, GoldenTree Asset Management LP and Syncora Guarantee Inc. said counsel to the Financial Oversight and Management Board, which represents PREPA, made the assertion that the economy in Puerto Rico is going down and not up. The argument was made during hearings in support of PREPA’s debt adjustment plan.
“Your Honor has, I think, heard that before, and no doubt will hear it again,” the oversight board attorney said. “I just want to emphasize that the [oversight] Board spends its time, its full time, monitoring Puerto Rico, and trying to provide for a better sustainable economy going forward. We are well aware of the numbers. And the reason why we haven’t broken out the champagne and started celebrating is that Puerto Rico is benefiting big time, as it should, from federal money flowing from both Hurricane Maria and the COVID crisis. And our fiscal plans, and the Judge is -- your Honor has probably noted them in the graphs, [which] show what happens when the Federal money stops, and it’s not a pretty picture. And that’s why we’re still working on it. Our plan here has to -- because it’s issuing 35-year-bonds, and it’s long-term sustainability, we have to plan for the long term, not for the sugar high for a few years of federal money.”
However, the bondholders noted that the next day, Pierluisi made statements during a televised interview that directly contradicted the statements made in court by counsel to the oversight board “to support a plan of adjustment built on an artificially depressed fiscal plan.”
Pierluisi’s remarks came in response to a question posed about the statement made by the oversight board’s counsel. The bondholders said the governor’s remarks confirmed that Puerto Rico has for three years experienced, and will over the next decade continue to experience, “substantial growth” based on a number of factors contributing to a strong economy.
Pierluisi also stated that “it’s important to understand the role that this attorney is playing.”
“This lawyer is striving for us to have the largest reduction, the largest possible reduction in the debt of the Electric Power Authority,” the governor said. “And what he’s saying, on one side, you have the bondholders, the creditors of the authority, saying, ‘Oh no, Puerto Rico is experiencing an unprecedented economic boom, so any amount can be paid. The Electric Power Authority will generate incredible revenues.’ And what this attorney is doing is saying ‘No, that’s not the case.’”
Pierluisi went on to say that “we have experienced growth. For three years in a row. The Planning Board has said that we will see growth over the next decade. Part of this growth is indeed fueled by federal funds and the ongoing reconstruction.”
But there’s more to it than that,” the governor continued. “Do you know why? Manufacturing here is thriving, tourism, hotels are at full capacity. We are breaking records in the number of passengers traveling through the international airport. We have a huge number of short-term rental properties contributing to the treasury, to the government, alongside what the hotels contribute through the room tax. In other words, this is a new Puerto Rico, and so, what we’re seeing here is substantial growth. Of course, this attorney wanted to say, ‘Hold on, that’s not the case. Just because there is this growth, it doesn’t mean that the authority can pay off any amount.’ Because, after all, who pays the electricity rates? Everyone -- the general public, businesses. And we do not want electricity rates to go up significantly.”
The oversight board, meanwhile, is seeking to force the bondholders to drop their complaint, arguing that it is void.