September 29, 2017 Read More →

El Gobierno Rechaza la Oferta de los Gonistas de la AEE

The New Day (San Juan):

The Financial Advisory Authority and Fiscal Agency (AAFAF) rejected the offer made by the group of organized bondholders of the Electric Energy Authority (AEE), noting that the proposal “is not viable” and would limit the recovery of the public corporation.

In addition, although Puerto Rico does not have a single penny to invest in infrastructure or make improvements to the existing one, the agency has established that it is not interested in receiving unsolicited offers of financing, as these only “complicate” recovery efforts after step of hurricane Maria.

“The bondholders’ proposal is an effort to build on the crisis in Puerto Rico and increase the value of its debt rather than helping the ESA reconstruction efforts succeed,” AAFAF said.

“The AAFAF requests that all future proposals be properly channeled and that groups of creditors refrain from making unsolicited offers of financing at the expense of the people of Puerto Rico,” the agency added.

This week, the Ad Hoc-AEE offered $ 1 billion to that public corporation in the form of a loan that would begin to be paid from 2019 at an approximate interest rate of 6%, using the London Interbank Index (LIBOR) . Because it is a loan to a debtor under financial stress, the financing would have to be paid first than any other bond or debt subject to negotiation under Title III of the federal law PROMESA. Last July, the AEE began a similar process to bankruptcy to negotiate under the direction of the court over $ 8.3 billion in bonds and lines of credit for the purchase of fuel.

IEEFA criticizes the proposal

For the Institute of Financial and Economic Energy Analysis (IEEFA), the Ad Hoc-AEE offer is “a play” of Wall Street that seeks to take advantage of the crisis that lives Puerto Rico. This, further pushing the ESA “to a cycle of generational indebtedness.”

The organization has consistently criticized public utility investment plans, pointing out, among other things, that AEE puts subscribers in Puerto Rico to dependence on fossil fuels as the main source of energy, but has also criticized the bondholders, noting that do not interest the good of the Puerto Rican economy.

“It is a cynical and deeply disappointing proposal, which shows the motivations of greedy bondholders, who somehow put their interests above any decency they may possess,” said the organization that has criticized the voluntary negotiations carried out by the organization. AEE with the bondholders.

From the Ad Hoc-AEE perspective, however, the funding would provide equity to the ESA that could be paired with federal recovery funds provided through the Federal Emergency Management Agency (FEMA). A similar dynamic occurred with the Long Island Electric Authority following Hurricane Sandy about three years ago.

More: The government rejects the offer of ESA bondholders

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