Fiscal board files its first amendment to PREPA’s debt adjustment plan

The Financial Oversight and Management Board said in its filing this week that “the First Amendment Parties hold greater than 50% in amount or voting power of the Bond claims held by the Supporting Bond Parties. ... The First Amendment is therefore a valid amendment to the amended [plan support agreement], binding on all supporting bond parties.”

By The Star Staff

The Financial Oversight and Management Board for Puerto Rico, as the representative of the Puerto Rico Electric Power Authority (PREPA) in its bankruptcy case, has presented an amendment to the utility’s debt adjustment plan, in what appears to be a sign that stakeholders are close to an agreement.

U.S. District Judge Laura Taylor Swain earlier this year declared a moratorium on the case and required the parties to negotiate to break a stalemate after the U.S. Court of Appeals for the First Circuit in Boston declared that bondholders had a secured interest in the utility’s payment of its obligations.

The “First Amendment” submitted to the court on Tuesday is with each of BlackRock Financial Management Inc., Black Rock Advisors LLC, Whitebox Advisors LLC, Nuveen Asset Management LLC, Franklin Advisers Inc., and Taconic Capital Advisors LP, and their respective accounts.

The First Amendment amends the amended plan support agreement (PSA) to extend the deadline for the effective date from Oct. 1, 2024, to Oct. 1, 2025, provides for an updated “most favored nation” clause, and includes the parties’ agreement in PREPA’s Master Trust Agreement.

The oversight board said “the First Amendment Parties hold greater than 50% in amount or voting power of the Bond claims held by the Supporting Bond Parties.”

“The First Amendment is therefore a valid amendment to the amended PSA, binding on all supporting bond parties,” the entity said.

The so-called Amendment 1 changes the dates for about $1.3 billion in bonds that are slated to be issued, extending their maturity to 30 years. Blackrock, Whitebox and Taconic will receive their pro-rata share of 3% of the principal amount of the Series B bond in cash.

The most favored nations clause was modified to say that if the oversight board proposes a plan of adjustment that treats any PREPA bondholder or insurer’s PREPA bond claim differently than the supporting bondholders’ PREPA bond claims, each supporting bondholder will have the right to choose to receive such different treatment on account of its PREPA bond claim in lieu of the terms set forth in the agreement. This is in lieu of the right to the RSA (restructuring support agreement) fee, the structuring fee and the $30 million reimbursement costs.