(Releads with with PREPA and bondholder group's statements)
By Nick Brown and Megan Davies
SAN JUAN/NEW YORK Jan 22 Chances of Puerto
Rico's power utility PREPA reaching a deal with creditors to
restructure its $8 billion debt were cast in uncertainty on
Friday as one deadline passed and the utility baulked at the new
terms offered for a new one.
Puerto Rican lawmakers' failure to vote by Friday on
legislation needed to make the restructuring deal work prompted
a group of bondholders to offer to extend the deadline until
Feb. 12, but PREPA rejected the changed terms.
"We are disappointed that the ... group did not grant our
requested extension," Lisa Donahue, PREPA's chief restructuring
officer, said in a statement. "PREPA remains willing to
continue discussions with the Ad Hoc Group and other
As the Friday deadline passed, the bondholder group issued a
statement describing PREPA's refusal as "extremely disappointing
Pressure is mounting to secure a deal at PREPA, as the U.S.
Supreme Court is slated to hear an appeal later this year in a
case that could allow Puerto Rico to push PREPA into bankruptcy,
an outcome creditors dread.
Reaching a deal to restructure PREPA's debt is seen as key
to fixing the debt-ridden U.S. territory's finances.
Needing to restructure debts totalling $70 billion, the
island's leaders want U.S. Congress to allow it access to U.S.
bankruptcy law or some form of court-sanctioned debt
PREPA said in December that it had reached a deal with 70
percent of all creditors, under which the bondholders agreed to
accept 15 percent cuts to repayments in exchange for new bonds
with higher ratings.
For that to work, Puerto Rico needs to pass legislation
enabling PREPA to create a new charge on customer invoices
specifically to pay the debt, so that the new bonds could earn
the higher ratings that creditors expect.
As part of their proposed extension, bondholders were also
offering to provide $115 million of additional capital.
However, PREPA said the bondholders changed the terms of
that offer, conditioning it on regulatory approval by Puerto
Rico's energy commission for the imposition of the additional
charges to customers.
Without a restructuring deal in place, the matter could
devolve into litigation.
(Reporting by Megan Davies and Nick Brown; Editing by Meredith
Mazzilli and Simon Cameron-Moore)