Creditors agreed to give Puerto Rico’s electric utility a little more time as it attempts to work out a turnaround plan.
In this latest move, creditors agreed to extend forbearance until June 18.
“We’re pleased that the creditors granted an extension to the existing forbearance agreements,” said Lisa Donahue, Chief Restructuring Officer of PREPA. “We continue to work with creditors towards a consensual resolution and the transformation of PREPA for the benefit of all stakeholders.”
PREPA faces more than $9 billion in debt, and a $400 million payment to bondholders is due July 1.
A recovery plan for PREPA was delivered to creditors earlier this month and calls for capital investment of at least $2.3 billion over five years and allowing third parties to bid on building and operating new plants as well as managing and operating PREPA’s existing facilities.
Additionally, it seeks to convert its existing plants to burn both natural gas and oil, as well as cut costs and improve customer collections.
The plan asks all stakeholders – customers, creditors, employees and management – to share the burden of ensuring the utility’s financial sustainability. It expects a restructuring with creditors by June 30.
Although the bond trustee said the utility lacks the funds to make its July 1 payment, analysts say it doesn’t necessarily indicate it won’t be paid.
Although some elements of the plan need to be negotiated, “Overall, we feel the plan provided a basis for this further collaboration, and we remain committed to finding a fair solution for all parties,” Stephen Spencer, a financial adviser to PREPA’S bondholders, told The Wall Street Journal.