Puerto Rico HTA plan appears set for approval

The Puerto Rico Highways and Transportation Authority plan of adjustment seems to have the support needed to win court approval.

Over 85% of the owners and insurers of the HTA 68 bond claims and more than 67% of the owners and insurers of the HTA 98 bond claims support the plan, the Puerto Rico Oversight Board’s restructuring legal team told Judge Laura Taylor Swain on Tuesday in a status report filed in the U.S. District Court for Puerto Rico.

Bloomberg News

HTA bondholders and insurers will vote on the plan, and at least one of the 19 bankruptcy classes would have to approve it before Swain considers it. For a class to approve the deal, holders of a majority of par must vote in favor of it and 2/3 of all the class’ voters, weighted by par, must support it.

In the central government restructuring Swain said she wanted to see a wide base of support for the plan of adjustment. 

On May 9, the Official Committee of Unsecured Creditors told the court it would support the HTA deal, because it said the board had agreed to increase the payment to the unsecured creditors to $48 million from $25 million. 

The board’s restructuring attorneys mentioned the unsecured creditors' support in their filing on Tuesday. 

The HTA plan of adjustment has a scheduled disclosure statement hearing on June 17 and a plan confirmation hearing on Aug. 10. 

While the terms of the HTA bond restructuring were largely set in the central government’s plan of adjustment approved in January, HTA bondholders did not get cash, bonds, or contingent value instruments when that plan was executed in March. Further conditions had to be met, including court approval. 

According to the terms of the HTA plan of adjustment, holders of $4.3 billion of HTA bonds would receive $1.2 billion of new bonds with 5% coupons and $389 million of cash. The generosity of the deal depends on what type of HTA bond is held.

About $1.2 billion of the original par value is uninsured and the rest is insured by Assured Guaranty, Financial Guarantee Insurance Corp., and Ambac Assurance. 

Separately, on Wednesday board attorney Brian Rosen told Swain the board hopes to have a Title VI qualifying modification hearing for Puerto Rico Public Finance Corp. debt around June 17. Title VI is a part of the Puerto Rico Oversight, Management, and Economic Stability Act that allows restructuring modifications to be brought to the court on a consensual basis.