April 10, 2014 / 4:30 PM / in 4 years

Puerto Rico hires third U.S. restructuring firm

NEW YORK, April 10 (Reuters) - Puerto Rico’s Government Development Bank, the U.S. commonwealth’s financing arm, has hired a third company with restructuring expertise as the island tries to balance its budget while also jump-starting its struggling economy.

The bank has hired West Palm Beach, Florida-based FTI Consulting, a global advisory firm that includes restructuring and turnaround experts.

The GDB had also recently retained Cleary Gottlieb Steen & Hamilton, a New York-based law firm with a specialist practice in financial restructuring, and Millco Advisors LP, a Washington-based affiliate of the firm Millstein & Co.

The hiring of FTI was first reported by the Wall Street Journal.

“In keeping with its commitment to the people of Puerto Rico and all of its stakeholders, the GDB frequently engages leading advisors to support its due diligence and decision making processes,” a bank spokesman said in an emailed statement to Reuters.

“To that end, the GDB has engaged FTI Consulting to advise on its ongoing and previously disclosed efforts to ensure that the Island’s public corporations improve their operational and financial performance.”

FTI declined to comment.

The Journal reported that the consultants were focused on the island’s power and transportation authorities.

Representatives from the Puerto Rico Electric Power Authority and the Puerto Rico Highways and Transportation Authority were not immediately able to comment.

Puerto Rico is struggling with an economy in or near recession for eight years as well as a budget full of holes.

All three major rating agencies cut the territory’s debt to junk earlier this year, another blow as the administration of Gov. Alejandro Garcia Padilla tries to restart growth while also balancing the budget.

Padilla has raised taxes, overhauled retirement programs and pledged to end years of operating deficits. The administration is also working to bring the large underground economy out of the shadows and onto the tax rolls.

While a $3.5 billion bond sale in March was heavily oversubscribed, the bonds nonetheless fetched a yield above 8 percent.

The sale spared Puerto Rico from the threat of imminent default, but few who have followed the Caribbean island’s financial troubles doubt that a massive restructuring is in its future.

Additional reporting by Lisa Lambert in Washington

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