PREPA to pay some $124 million to buyers of $1.6 billion in new debt as part of settlement
By The Star Staff
A forward bond purchase agreement published in the Puerto Rico Electric Power Authority (PREPA) bankruptcy process shows that the power utility agreed to pay about $124.4 million to buyers of $1.6 billion in new debt.
BlackRock Financial Management, Whitebox, Taconic, Franklin and Nuveen agreed to buy $1.6 billion in debt from PREPA as part of the bankruptcy settlement, which still requires court approval.
The execution of the purchase agreement was authorized by the resolution adopted by the Financial Oversight and Management Board on Aug. 18 authorizing execution of a Plan Support Agreement, Forward Delivery Bond Purchase Agreement, and Filing of the Third Amended Plan of Adjustment.
The $124.4 million pays for the forward delivery bond commitment fee and the exit financing structuring fee, the document notes. That amount of the bonds sold may be reduced by up to $37.5 million, if bonds are required to be taken to first settlement bondholders.
PREPA’S plan of adjustment is opposed by holders of over half of its outstanding bonded debt, including GoldenTree Asset Management, Invesco and bond insurers Syncora and Assured Guaranty, in motions submitted to the court in August.
In the motions, Invesco, Syncora and Golden Tree said the debt plan was unconfirmable as it provides disparate treatment to creditors whose rights are similar, if not identical. They said the plan, which would cut bondholders’ debt by 80% to $2.5 billion, improperly classifies various identical claims separately to gerrymander accepting classes, and thus, violates the Bankruptcy Code.