SAN JUAN/NEW YORK Puerto Rico's House of Representatives on Monday approved a bill aimed at overhauling the island's troubled power utility PREPA, pushing the agency a step closer to finalizing a deal with creditors to restructure more than $8 billion debt a day before a key deadline.
Fixing PREPA's debt is seen as an important step in resolving an overall $70 billion debt load in Puerto Rico, and the utility has struck agreements with creditors on a debt exchange in which bondholders would accept 15 percent cuts to repayments.
The creditors' support, though, is premised on passing legislation aimed at stabilizing PREPA's finances and governance.
The House passed the bill, known as the PREPA Revitalization Act, on Monday night, according to a webcast of the vote, following passage by the Puerto Rican Senate on Wednesday.
However, because the House introduced amendments, the bill must return to the Senate for approval before Governor Alejandro Garcia Padilla can sign it into law.
"This Act will facilitate key aspects of PREPA's comprehensive transformation, including our financial restructuring," said Javier Quintana Mendez, Executive Director of PREPA, in a statement.
Under the terms of the debt restructuring, creditors can walk away from the deal if it isn't enacted by midnight on Tuesday.
However, according to a source familiar with the matter, creditors are willing to extend the deadline if senators need a little extra time.
"We don't anticipate there being major problems" regarding the deadline, said the source. "There's a sense that both the Senate and the House will have worked through the major issues on the bill."
Lisa Donahue, PREPA's chief restructuring officer, on Thursday said elements of the bill that would impose an independent board and explore partnerships with private sector energy producers had raised the most questions from legislators.
The deal to restructure PREPA was struck in December but hit a road bump earlier this year when Puerto Rico's lawmakers failed to meet initial deadlines in January to pass the bill. PREPA's largest bondholder group offered an extension, which PREPA at first rejected over terms of a $115 million loan from the bondholders. The two sides eventually came to terms on the extension through Feb. 16.
(Reporting by Nick Brown and Megan Davies; Editing by Dan Grebler and Richard Pullin)