Creditors for Puerto Rico’s main electricity provider are reviewing a proposal from the utility that would help the agency avoid a $420 million bond default on July 1, according to three people with direct knowledge of the plan, Bloomberg reported yesterday. The Puerto Rico Electric Power Authority is in private talks with investors owning about 35 percent of the agency’s securities and bond insurance companies to free up cash needed to make the principal and interest payments. The transaction would be similar to one reached before a Jan. 1 payment, where creditors agreed to buy new securities that mature in 2019. The government-owned utility, called Prepa, reached an agreement in December with hedge funds and mutual funds, known as the Ad-Hoc Group and insurers MBIA Inc. and Assured Guaranty Ltd., to restructure $9 billion in debt. The agreement was the first reached between a commonwealth entity and creditors as it seeks to reduce its $70 billion debt burden.
