More parties want in on PREPA mediation

Puerto Rico’s local government presented its mixed view of Puerto Rico Electric Power Authority’s bondholders' request for mediation to execute a deal, arguing for slower timeframes for negotiating a deal.

Several other parties, including bond insurers and unsecured creditors, filed responses to the court, asking for them to be included in any potential mediation over PREPAs debt restructuring.

The Puerto Rico Fiscal Agency and Financial Advisory Authority and PREPA submitted their positions to the U.S. District Court for Puerto Rico, which is overseeing the authority’s bankruptcy, on Friday.

Gov. Pedro Pierluisi told the Oversight Board on Thursday he thought all involved parties should revisit and potentially revise the current PREPA RSA, which was reached in early 2019. This is partly because of predictions of increasing demand by electrical vehicles. FAFAA is under Pierluisi’s direct control.

In its filing, FAFAA and PREPA said unless the local legislature in the “near term” passes legislation supporting the current proposed bond deal, the Restructuring Support Agreement, there should be mediation to create a “confirmable” and “consensual” Plan of Adjustment.

However, unlike the proposal made by the Ad Hoc Group of PREPA Bondholders, mediation should include parties beyond the Oversight Board and the bondholders. Further, the mediation should cover other topics besides the “mechanics” of “RSA implementation.”

FAFAA and PREPA also said the Ad Hoc Group’s proposed deadlines for achieving and implementing a Plan of Adjustment are “unrealistic and counterproductive.”

Board Chairman David Skeel said the board would not tinker with the current RSA. Either the legislature would enact laws to support it or the board and other parties would negotiate a completely different RSA that didn’t require legislative action, he said at a press conference following Thursday’s board meeting, .

The authority’s fuel line lenders on Friday joined the bondholders in asking the judge for mediation. The bondholders have said the mediation should be held to create a “Plan B” RSA that is independent of the legislature, in case the legislature rejects approving bills for the current RSA.

Assured Guaranty Corp. and Assured Guaranty Municipal Corp, which insure PREPA bonds, filed a response with the court Friday saying they should be included in any mediation.

The Unsecured Creditors Committee also filed a response with the court saying mediation should cover not just implementation of the RSA without aid from the local legislature but also the RSA’s underlying terms. “Mediation must … reexamine the underlying economics and legal structure of the settlement embodied in the RSA because the legal landscape has fundamentally changed since the RSA’s execution in May of 2019.”