Puerto Rico and Whitefish Energy Holdings yesterday defended their $300 million contract for the small Montana company to repair the U.S. territory’s hurricane-ravaged power grid after the deal was criticized by U.S. lawmakers, Reuters reported. The back-and-forth comes as Puerto Rico struggles to restore power to more than 80 percent of the island a month after Hurricane Maria made landfall. Whitefish last month signed a deal with Puerto Rico’s quasi-public power utility, PREPA, to help fix a grid that was nearly destroyed by Maria, the strongest storm to hit Puerto Rico in 90 years. Whitefish was awarded the deal without a competitive bidding process, and despite the facts that it had just two full-time employees and was established only two years ago. That drew criticism from legislators who suggested cheaper options might have been available. Governor Ricardo Rosselló said in a statement yesterday that his administration would review PREPA’s contracting practices and forward findings to the island’s comptroller. Rosselló defended the deal, saying that it was necessary to ensure Puerto Rico would have workers in place quickly. Read more.
In related news, Franklin Resources Inc., one of Puerto Rico’s largest creditors, sold hundreds of millions of dollars of the island’s bonds in recent days, part of an exodus of investors hurt by accelerating losses in the wake of recent hurricanes, the Wall Street Journal reported today. A swath of mutual funds and hedge funds who held on to Puerto Rico’s roughly $70 billion of bonds even after the island started bankruptcy proceedings last year are now throwing in the towel. That includes Franklin Mutual Advisers LLC, a Short Hills, N.J.-based unit of Franklin Resources, which has sold its entire $294 million stake in Puerto Rico general obligation bonds, people familiar with the matter said. Bonds with a total face value of $8.24 billion have changed hands from the beginning of the month through October 23, more than in any other full month since the beginning of 2015, according to Municipal Securities Rulemaking Board data. The only time trading approached that amount was July 2015, after Puerto Rico’s then-governor said that the island’s debts were “not payable.” Read more. (Subscription required.)
