March 18, 2019 / 9:54 PM / 2 months ago

Puerto Rico debt adjustment plan not 'realistic' in April: official

SAN JUAN (Reuters) - The executive director of Puerto Rico’s federally created financial oversight board said on Monday that a plan to restructure the U.S. commonwealth’s core government debt likely cannot be done by the end of April.

FILE PHOTO: The Capitol building is seen in San Juan, Puerto Rico May 4, 2017. REUTERS/ Alvin Baez/File Photo

An attorney for the board last week told a U.S. judge who is hearing Puerto Rico’s bankruptcy cases that a draft plan was expected next month, according to local media reports.

But on Monday, the oversight board’s executive director, Natalie Jaresko, said the attorney meant to say that the plan could be filed with the court “at best” in April.

“I don’t think it’s highly realistic to do this by the end of April,” Jaresko said, adding that board’s goal is to seek court confirmation of a plan before year end.

Negotiations are ongoing with creditors over a plan of adjustment for roughly $13 billion of general obligation debt and almost $50 billion in unfunded pension obligations, although the board has asked the court to void more than $6 billion of GO bonds issued in 2012 and 2014.

“We’re trying not to do a cramdown, but I don’t know where that’s going to end up in the end,” Jaresko said, referring to a process where an adjustment plan could be imposed on certain creditors.

She took questions from the media following a meeting on Monday with members of the U.S. House Natural Resources Committee, which oversees U.S. territories and which has raised concerns over the 2016 federal Promesa law that created the oversight board.

“I think the Promesa law is working right now,” Jaresko said, adding that she cannot predict whether Congress would seek to revise it.

A committee spokesman did not immediately respond to a request for comment.

The privatization of Puerto Rico’s bankrupt power utility, PREPA, is “moving forward,” but its pace “needs to improve,” Jaresko warned.

Governor Ricardo Rosselló announced in January 2018 his plans to privatize PREPA, a process that was expected to take 18 months. It was not until earlier this year, however, that the government selected companies to bid on taking over the distribution and transmission of power on the island. The utility, which filed for bankruptcy in the summer of 2017, continues to negotiate with its creditors to restructure roughly $9 billion in debt.

Puerto Rico has won court approval for restructurings of debt from its Government Development Bank and Sales Tax Financing Corporation known as COFINA.

Reporting by Karen Pierog in Chicago and Luis Valentin Ortiz in San Juan; Editing by Matthew Lewis

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