Puerto Rico gained another week to file a proposed rate charge to the island’s energy commission, a fee that would back debt used to restructure about $9 billion owed by its main electric utility.
Puerto Rico Electric Power Authority creditors agreed to give officials until March 30 to submit their petition to implement a new customer fee, called a securitization charge, according to a statement from the utility on Wednesday. A January agreement between Prepa, as the utility’s known, bondholders and bond-insurance companies was set to expire Wednesday unless the energy commission received the rate petition.
The restructuring would be the first step in the commonwealth’s pursuit to cut its $70 billion debt load after Puerto Rico and its agencies borrowed for years to fix budget deficits. The island’s economy has struggled to grow since 2006 and it has already defaulted on some agency debt. Prepa faces a $1.13 billion payment to investors and lenders on July 1 that it won’t be able to pay without the creditor agreement.
The commonwealth’s three-member energy commission will have 75 days to weigh in on the new fee once it’s submitted. Prepa needs the proposed securitization to be approved so it can execute its restructuring deal under which investors agreed to take a 15 percent loss by swapping their securities for new bonds. The proposed securitization charge would repay the debt.
Prepa and its creditors agreed to the debt exchange after first signing a contract in August 2014 that kept negotiations out of court. The restructuring will allow Prepa to modernize a system that relies on petroleum to produce electricity.
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