Washington - The Oversight Board in charge of public finances in Puerto Rico renewed negotiations with the creditors of the Puerto Rico Electric Power Authority (PREPA) yesterday, in order to avoid the restructuring of debt of that corporation debt going to the new Territorial Bankruptcy Court.
Less than 24 hours after rejecting the Restructuring Support Agreement (RSA) that was renegotiated this year, members of the Board said yesterday that they put on the table a series of possible amendments that they have presented in the last days to groups of bondholders and banks that have financed the debt of PREPA.
Among the demands of the Board is that banks as well as uninsured bondholders, also face a 15% cut in debt and the creation of a "turbo bond" aimed to pay the debt with creditors more quickly, that is in 30 years.
The proposal disclosed by the Board also seeks to avoid the possibility of an increase in the rate. This, by imposing a limit on the transition charge that would be less than four cents, towards 2026. A leniency agreement with creditors would also allow to avoid the default of $ 455 million that may happen on Saturday and cover about $ 300 million in bonds for capital investments.
"Negotiations continue", said the Board, that meets tomorrow in San Juan.
On Tuesday night, following a 4-3 vote, a majority of that fiscal body rejected the RSA, which has been criticized by various sectors, including the Private Sector Coalition of Puerto Rico and Democratic leaders of Congress for understanding that the debt cut is very low and also due to the fear that the demands of the PREPA fiscal plan will cause an increase in rates.
Howeever, in recent days, there have not been the five necessary votes for the Board to agree to restructure the debt through the territorial judicial bankruptcy system established by Title III of PROMESA and presides by Judge Laura Taylor Swain in San Juan.
"As the Board rejected (the previous night) the petition of title VI (voluntary negotiations), the governor is considering the alternatives he has with facing the reality that there are payments that expire on July 1st", noted Elías Sánchez, representative of governor Ricardo Rosselló in the Board.
Hours earlier, the governor, who yesterday had meetings in Congress- said that "in the coming days I will be passing judgment on the alternatives we have".
In Congress, rejection of the RSA infuriated Republican leaders who have been pushing for that agreement and made veiled threats over Puerto Rico requests for funds, El Nuevo Día came to know.
Democrats welcomed the rejection of the agreement.
"The restructuring proposal treated the Puerto Rican people as a secondary issue, (so) the Board acted correctly in rejecting it" stated Democratic Congressman Raul Grijalva (Arizona), chairman of the House Committee on Natural Resources.
Also Democrat Nydia Velázquez (New York), said on her part, that rejecting the RSA "will benefit Puerto Rico, its residents, local businesses and its long-term prosperity", so "now the Board must take the next logical step and enter Title III regarding the financial obligations of PREPA. "
Among the creditors there has been some daze with the decision to reject the RSA. "We are disappointed with the Board decission of not approving (RSA) after three years of negotiations and we believe that the decision violates the PROMESA law", claimed the National Public Finance Guarantee Corporation insurer, referring to the section of the law that recognizes voluntary agreements adopted before May 18th, 2016.