SAN JUAN, Puerto Rico - Puerto Rico's power company now seems destined for a longer bankruptcy than anticipated, as several creditors rejected a fresh debt restructuring plan that was presented Friday after years of failed negotiations. Went.
Puerto Rico's largest local government agency, the Electric Power Authority, has more than $10 billion in debt, which will be nearly halved according to a plan presented to the federal control board that oversees the island's finances.
Board President David Scheel warned that "residents and businesses in the US territory" will pay for this modest debt through their electric bills.
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On the other hand, he said, "(the power company) needs to step up and Puerto Rico needs reliable electricity."
The announcement affected many Puerto Ricans who were already suffering from a severe economic crisis and had seen their electricity bills rise despite recent steady increases, partly due to years of neglect and poor management.
The board noted that two classes of creditors supported the plan, more than the minimum number required by law for a federal judge to order its implementation on a broad scale.
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Scheel noted that no settlement had been reached with holders and guarantors of $7.6 billion in power company bonds, but said that one option provided by the plan was for them to become members of a settlement class.
He said the board was open to further negotiations, adding that "Puerto Rican citizens and businesses cannot afford to pay the demands of certain creditors at this point." "We look forward to reaching a workable agreement."
The ad hoc group, which includes businesses that hold or insure about half of the power company's debt, rejected the plan and warned that it would only serve to prolong the company's nearly six-year bankruptcy,
Island residents are among the biggest losers in the disturbance, according to financial advisor Stephen Spencer of Houlihan Locke's group.
As litigation and arbitration talks continue, the protracted bankruptcy has already incurred more than $200 million in legal fees.
Spencer pointed out that since 2015, the power company has broken its commitments to three debt restructuring agreements. In March, Governor Pedro Pierluisi announced he was rejecting the most recent proposal because it was not practical or in the best interests of the island.
After the first round of arbitration talks failed, a federal judge presiding over Puerto Rico's bankruptcy case ordered a new round in September.
Since announcing in 2015 that it was unable to pay a public debt load of more than $70 billion and filing for bankruptcy two years later as the largest US municipality, Puerto Rico has paid off nearly all of its debt. restructured.
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The only outstanding debt is owed by the power company, and clearing it is considered essential to attracting investors to the island and furthering its economic development.