National Public Finance Guarantee announced that it has filed a complaint against the Financial Oversight and Management Board for Puerto Rico (Oversight Board), seeking declaratory, injunctive and mandamus relief requiring the Oversight Board to comply with its obligations under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), to certify the modifications to the Restructuring Support Agreement (RSA) and to allow a final vote of the Puerto Rico Electric Power Authority’s (PREPA) bondholders.
According to National Public Finance Guarantee’s release, “Implementation of the RSA is vital to Puerto Rico’s long-term financial health and stability, providing PREPA much-needed debt relief and near-term liquidity, restoring its access to the capital markets and attracting private investment necessary to modernize the utility and ensure compliance with the EPA. The current RSA was carefully negotiated over three years and approved by multiple parties, including two governors, the Puerto Rico legislature, the Puerto Rico Fiscal Agency & Financial Advisory Authority, the Puerto Rico Energy Commission and the PREPA board. In passing PROMESA on June 30, 2016, Congress singled out the RSA for expedited approval, eliminating the need for substantive review and providing that the Oversight Board only need to certify that the proposed debt modification is consistent with the preexisting RSA. To date, the Oversight Board has arbitrarily failed its legal obligation to approve the RSA.”
Bill Fallon, C.E.O. of National Public Finance Guarantee, states, “After three years of good-faith negotiating and broad consensus among PREPA and its creditors, we are disappointed to see the Oversight Board refuse to comply with the law and instead attempt a last-minute renegotiation before the RSA expires. The Oversight Board’s delay in moving forward a deal already approved by two governors, the Puerto Rico legislature, the Puerto Rico Fiscal Agency & Financial Advisory Authority, the Puerto Rico Energy Commission and the PREPA board, could have damaging repercussions for PREPA, Puerto Rico consumers and Puerto Rico’s economy as a whole. Turning off the lights is not an option, but the Oversight Board’s lack of action poses a serious and unnecessary risk of disrupting the provision of electricity on the island.”
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