The Puerto Rico Aqueduct and Sewer Authority (“PRASA”) and the Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”) announced the consummation of definitive agreements (the “Agreements”) restructuring PRASA’s debt obligations under the Environmental Protection Agency’s (“EPA”) Clean Water and Drinking Water State Revolving Fund programs (“SRF”) and the United States Department of Agriculture’s (“USDA”) Rural Development, Rural Utilities Service program (“RD/RUS” and together with the EPA, the “Federal Parties”), totaling almost $1 billion (the “Federal Debt”).

The Agreements were approved by the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), pursuant to Section 207 of PROMESA. The Agreements mark an important milestone for PRASA and the Government of Puerto Rico (the “Government”), ending the need for continued forbearance agreements related to the Federal Debt and removing uncertainties about PRASA’s future.

“The Agreements result in substantial benefits for PRASA, the Government and the people of Puerto Rico, including (i) debt service relief to PRASA of approximately $380 million over the next ten years, (ii) renewed access to potential sources of funds under federal programs for infrastructure projects, (iii) elimination of approximately $1 billion in Commonwealth guarantees over the Federal Debt, and (iv) adequate protection of the interests of the Federal Parties,” said Elí Díaz-Atienza, Executive President of PRASA.

Eli Diaz

Eli Diaz Atienza, Executive President of PRASA. (Carlos Rivera Giusti)

“Today’s achievement is the final step in what has been a long process that was only possible thanks to ongoing support from the Office of the Governor, Congresswoman Jenniffer González, the hard work of PRASA’s management team, and the commitment and support of AAFAF, the Puerto Rico Infrastructure Financing Authority, the Puerto Rico Department of Natural and Environmental Resources, and the Puerto Rico Department of Health” added Díaz-Atienza. “For nearly three years, PRASA and the Federal Parties have been in constant communication focused on achieving a consensual, sustainable solution that would reset our mutual relationship, while setting PRASA on a path to long term sustainability,” he added.

AAFAF Executive Director, Omar Marrero, Esq., confirmed that “the Agreements set PRASA on a clear path to credit rehabilitation that will allow it to regain municipal market access in the near term for future capital investments.”

“This transaction was possible thanks to the leadership and hard work of PRASA’s executive team and we are confident it will pave the way not only for PRASA’s smart metering public private partnership project, but also other consensual debt restructurings of public corporations that will result in real and tangible benefits for the people of Puerto Rico,” added Mr. Marrero.

The Agreements modify the economic terms of approximately $570 million in outstanding SRF loans and $403 million in RD/RUS bonds, eliminate the Government’s guaranty of such debt, and designate the new Federal Debt as parity senior debt with PRASA’s other senior debt pursuant to the terms of PRASA’s existing Master Agreement of Trust.

The Agreements were executed on July26, 2019 and publicly disclosed through the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA®), on August 9, 2019, in accordance with the Securities and Exchange Commission timelines for such a filing.

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.