The federally appointed financial oversight board tasked with guiding Puerto Rico’s debt restructuring has finalized a deal with two key creditors, adding to growing support for the proposed plan to fix the commonwealth’s debt crisis, Reuters reported. The oversight board, represented by Proskauer Rose, announced its pact with bond insurers Ambac Financial Group and Financial Guaranty Insurance Company in a statement on Tuesday. The settlement resolves the bond insurers’ litigation over rights to certain revenues and sets aside $260 million for holders of debt issued by the Puerto Rico Infrastructure Financing Authority (PRIFA). Puerto Rico filed for its bankruptcy-like court proceeding, known as a Title III case, in May 2017 to address its approximately $120 billion in public debt and pension liabilities. In recent months, the board has struck deals with a variety of powerful creditor groups that should help it conclude the Title III proceedings by the end of the year. Under the proposed debt adjustment plan, Puerto Rico’s $35 billion in public debt would be reduced to $7.4 billion and more than $50 billion in pension liabilities would be restructured. The proposal has support from several groups of bondholders and other creditors but still faces opposition from the Puerto Rican government, as well as some retail investors and individual citizens. Ambac and FGIC insure hundreds of millions of dollars in PRIFA bonds, which the authority stopped paying in 2015. Under the agreement announced Tuesday, PRIFA bondholders will collect $260 million in cash — a 90% discount to PRIFA claims, according to the board’s statement. Of that amount, Ambac will receive $34.75 million and FGIC will receive $21.75 million, according to court papers.
