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FACTBOX-Puerto Rico's utility to work on restructuring plan
August 15, 2014 / 1:15 AM / in 3 years

FACTBOX-Puerto Rico's utility to work on restructuring plan

Aug 14 (Reuters) - Puerto Rico’s electric power authority PREPA struck a deal with bondholders on Thursday to develop a restructuring plan to revive the debt-stricken utility as it got an extension of vital lines of credit it uses to buy oil. Here are some facts about PREPA:

: Puerto Rico’s highway, water and electricity authorities hold about $20 billion in bonds. PREPA is widely viewed to be in the weakest condition of the agencies.

: PREPA has $8.3 billion of outstanding bond issues with maturities ranging from 2015 to 2043. The bonds are secured by a pledge of the authority’s net revenues, according to Standard & Poor‘s. PREPA uses the credit lines to buy oil for its generators.

: PREPA must make a coupon payment to bondholders of about $209 million in January, according to information provided by Puerto Rico’s Government Development Bank (GDB).

: It has $671 million outstanding under revolving loan facilities, of which $146 million is from Citigroup Inc and $525 million from a consortium led by Scotiabank.

: PREPA typically repays its lines of credit with revenue associated with fuel costs recovered from customers, however the utility does not currently have surplus liquidity to repay the amounts, according to Standard & Poor‘s.

: If it were to fail to make the credit facility payments, it would not default, but it would increase the likelihood it will restructure its debt, S&P said.

: S&P in July cut its view on PREPA’s power revenue bonds two notches deeper into junk, to CCC from B-.

: Of PREPA’s debt, $9.2 billion is subject to ‘The Puerto Rico Public Corporations Debt Enforcement and Recovery Act’. Known as the ‘Recovery Act’, the legislation allows certain public corporations to restructure their debt.

: 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. Oxford Advisors’ Krellenstein estimates that PREPA’s fuel cost could be closer to $1 billion if it converts to natural gas.

: After an initial decline uninsured PREPA’s bonds have recovered some of their losses but are still trading at distressed prices.

: PREPA series 2012A revenue bonds with a 5 percent coupon and a 2024 maturity date traded with an average price of 47.365 cents on the dollar on Wednesday, compared with a low of 33.820 cents on July 2. (Compiled by Megan Davies; Editing by Ken Wills)

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