Friday, January 22, 2016

Bacó expects Prepa’s RSA deadline to be extended again


Economic Development Secretary Alberto Bacó Bagué expects the Puerto Rico Electric Power Authority (Prepa) restructuring support agreement (RSA) January 22 deadline to be extended yet again, giving more time to the commonwealth legislature to approve the Prepa Revitalization Act. The RSA requires for its execution the approval of the said Act or a similar, “acceptable” legislation.

“The sides have to reach an agreement,” said Bacó, an appointed member of the Prepa Governing Board. “The agreement is so favorable, so complex and so much has been invested to achieve it.”

Bacó anticipated that the local House and Senate will approve the Prepa restructuring legislation. The legislators “want to revise [the bill] and make some adjustments, but the spirit is to approve it.”

The Secretary believes that the negotiated deal with creditors will not be scrapped as a result of the lack of approved legislation, despite repeated statements to the contrary by Prepa Chief Restructuring Officer Lisa Donahue. “I believe everyone will understand there is still space to continue fine tuning the agreement,” Bacó added.

Amendments won’t kill the RSA
Sources told Empresarios that the RSA is unlikely to be scrapped as a result of the expected multitude of amendments to the Prepa Revitalization Act, as long as the securitization and governance aspects of the legislation are kept intact. The securitization mechanism is critical to the issuance of new bonds that can achieve the coveted investment grade status.

 Already announced amendments include the preservation of the Puerto Rico Energy Commission’s (PREC) rate approval authority, the elimination of proposed charges and references to renewable energy and the option for the restructuring corporation to file for Chapter 9 bankruptcy protection.


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