Apr 30, 2024
Puerto Rico Utility Bondholders Seek Bigger Bankruptcy Payouts
, Bloomberg News
(Bloomberg) -- Bondholders of Puerto Rico’s bankrupt power utility are pushing for the court to increase what they stand to recover as new projections show the company’s revenue is likely to outstrip expectations due to higher electricity consumption.
US District Court Judge Laura Taylor Swain is reviewing a restructuring plan that would cut by about 75% the obligations of Puerto Rico’s Electric Power Authority, called Prepa. Assured Guaranty Corp., a group of ad hoc bondholders, GoldenTree Asset Management and other creditors want Swain to also consider updated energy consumption estimates that indicate an increase in demand compared to prior projections, according to an urgent motion filed to the court late Monday.
The more energy that Prepa sells, the more revenue it will collect that could go toward repaying debt. The creditors said that projected demand would provide another $1.5 billion of revenue that would available to pay bondholders.
Prepa’s recent restructuring plan would cut $10 billion of debt down to about $2.5 billion.
“The revised load forecasts provide important revised financial information demonstrating that Prepa can afford to pay its creditors more than is proposed under the plan,” lawyers for the creditors wrote. “Omitting the revised load forecasts from evidence would result in the court potentially issuing a ruling based on an outdated and incomplete record.”
Puerto Rico Utility Begins Hearings on Plan to Cut Debt by 75%
Luma Energy, a US-Canadian consortium, manages the island’s electrical grid. A revision of its load forecasts dated April 1 shows higher consumption estimates through 2044 compared with earlier projections, according to court filings.
Puerto Rico’s financial oversight board, which manages Prepa’s bankruptcy, declined the creditors’ request to revise the debt-cutting plan to include the new projections, according to a court filing. The board stands by the “comprehensive” research and data projecting revenue and expenses used in its restructuring plan, Matthias Rieker, a board spokesperson, said in an email. Prepa has been in bankruptcy for nearly seven years.
“The oversight board sees no logic in the dissenting bondholders’ request to consider preliminary new data concerning electricity generation but not operating and capital expenses,” Rieker said.
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