Multiple parties – including the ad hoc group of general obligation bondholders (GO Group), National Public Finance Guarantee and the PREPA Bond Trustee – filed with the U.S. Bankruptcy Court separate objections to The Financial Oversight and Management Board for Puerto Rico and The Puerto Rico Fiscal Agency and Financial Advisory’s urgent financing motion.
The GO Group asserts, “The GO Group objects to the nature and terms of the debtor-in-possession (‘DIP’) financing sought by the Oversight Board and AAFAF (the ‘Proposed Loan’), which contemplates the Commonwealth of Puerto Rico (the ‘Commonwealth’) extending a DIP loan to the Puerto Rico Electric Power Authority (‘PREPA’)….Worse still, the Oversight Board’s maneuvring seeks to displace the legitimate path for seeking such funding for PREPA, which would involve a reasonable market process and adequate disclosures of the debtor’s finances. The Oversight Board, which serves as representative of both the would-be borrower and the would-be lender, has simply determined for itself that this unprecedented transaction is best for all involved. It is not. To the contrary, the Proposed Loan is a massive windfall to PREPA, a severe and unnecessary financial blow to the Commonwealth, and a startling arrogation of power by the Oversight Board.”
In addition, “The economic reality is that the Proposed Loan transfers hundreds of millions of the Commonwealth’s dollars to PREPA. And even the minimal constraints in the Proposed Loan are illusory.” The Bondholders also filed a motion for expedited consideration of its urgent cross-motion, in the alternative, to intervene. According to that motion, “The GO Group has filed an objection to the Loan Motion contemporaneously herewith….[I]n case the Court holds that the GO Group lacks standing to object, the GO Group included with its objection a cross-motion in the alternative to intervene for the purpose of objecting (i.e., the Intervention Motion). The Intervention Motion will be moot if the Court rules on the Loan Motion before reaching the Intervention Motion.”
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