The Puerto Rico Electric Power Authority (Prepa) struck a deal with bondholders yesterday to develop a restructuring plan to revive the debt-stricken utility as it won an extension of vital lines of credit it uses to buy oil, Reuters reported yesterday. Prepa is widely viewed to be in the weakest condition of Puerto Rico's highway, water and electricity agencies. A restructuring of its debt, moving to cheaper fuel and cutting jobs are seen as ways to ensure longer-term health of the utility. Under the terms of yesterday’s deal, bondholders and insurers holding more than 60 percent of its bonds gave Prepa the go-ahead to develop a restructuring plan by March 2, 2015. It pledged to appoint a chief restructuring officer by Sept. 8. The deal includes bondholders currently suing Puerto Rico over a new law that provides a legal framework for some public corporations to enter a bankruptcy-type process, Prepa said. Oppenheimer Funds, Franklin Templeton Investments and hedge fund Blue Mountain have sued to annul the act. Crucially, bondholders will receive payments on interest and principal during the period that covers a $209 million debt coupon payment in January. However, it was unclear whether a restructuring plan would involve a writedown of Prepa's debt. http://www.reuters.com/article/2014/08/15/usa-puertorico-prepa-idUSL2N0… For more on Prepa and Puerto Rico’s new law, the Public Corporate Debt Enforcement and Recovery Act, be sure to listen to ABI’s latest podcast: http://news.abi.org/podcasts/151-examining-puerto-rico-recovery-act-and…
