(Adds details on credit line, dates, background)
Aug 14 Puerto Rico's electric power authority
PREPA on Thursday struck a deal with bondholders to develop a
restructuring plan to revive the debt-stricken utility, as it
got an extension of vital lines of credit that it uses to buy
PREPA, with around $9 billion of debt, is widely viewed to
be in the weakest condition of Puerto Rico's highway, water and
electricity agencies. A restructuring of its debt, moving to
cheaper fuel and cutting jobs are seen as imperative to its
Under the terms of Thursday's deal, bondholders and insurers
holding more than 60 percent of its bonds gave PREPA the
go-ahead to develop a restructuring plan by March 2 2015. It
pledged to appoint a chief restructuring officer by September 8.
The deal includes bondholders suing Puerto Rico over a newly
passed law which provides a legal framework for some public
corporations to enter a bankruptcy-type process, PREPA said.
Oppenheimer Funds, Franklin Templeton Investments and hedge fund
Blue Mountain have sued to annul the act.
PREPA was on the hook for $146 million from Citigroup Inc
and $525 million from a consortium led by Scotiabank
. PREPA had already gained a two-week extension to the
credit lines that expired on Thursday.
Its bank credit lines are now extended to March 31, during
which the banks will receive interest payments, it said.
The power authority said it would focus on improving the
generation, transmission and distribution of the island's power
supply and the overall quality of data collection and reporting.
The core of PREPA's problems is that it uses high cost oil
to generate electricity. PREPA spends almost two-thirds of its
operating budget, or $2.6 billion, on oil and electricity prices
on the island are double those in the mainland United States.
The agreement also gives PREPA the ability to use $280
million of a construction fund to pay expenses and capital
improvements, as of later this month.
(Reporting by Ed Krudy, Luciana Lopez and Megan Davies, editing
by G Crosse and Richard Chang)