The Multisectoral Council, composed of more than 50 commercial, professional, religious, educational, community, industrial, labor and environmental organizations, urged the country's municipalities to unite and express themselves publicly and forcefully against the proposed increases to pay the debt of the Puerto Rico Electric Power Authority, given the real threat of a group of PREPA bondholders who insist before the bankruptcy court that the people and businesses in Puerto Rico have the capacity to pay the totality of the debt in PREPA bonds.
“We are at a key moment in PREPA's bankruptcy process,” noted Cathy Kunkel, energy expert and spokesperson for the Multisectoral Meeting. “Prepa's bondholders have again insisted that they be paid the full $8.5 billion in bond debt through abusive rate increases over the next 35 years or more. It is important to unite our voices and emphasize again before Judge Laura T. Swain the impossibility of sustaining what these bondholders are demanding,” he said.
The Multisectoral Group called on all municipalities to approve municipal resolutions that would allow them to present to the judge the impact that more electricity increases and the continued poor service on the island would have on the municipalities and their residents. As part of the Junte's multi-sector collaboration and advocacy effort, model resolutions were prepared with data from each municipality and were sent and made available to each of the municipalities and their municipal legislatures.
In March, Judge Swain held several days of hearings in San Juan on PREPA's then proposed debt adjustment plan that would have paid some $2.5 billion to bondholders and other creditors. However, in June, the First Circuit Court of Appeals in Boston issued a ruling that opened the door for a group of bondholders - led by GoldenTree Asset Management - to again insist that they be paid 100% of the bonded debt. This scenario would require rate increases many times higher than those already proposed in the last debt adjustment plan.
GoldenTree Asset Management is a Manhattan-based speculative company that decided to start buying PREPA bonds in 2018, after the bankruptcy began and after Hurricane Maria destroyed the electric system, and is now seeking to profit from the litigation process.
Last July 10, Judge Swain stayed the bankruptcy case for a period of 60 days and ordered the parties to sit down to negotiate to reach an agreement.
“This pause gives us the opportunity to raise again with the judge and the parties in the case the dire impacts of imposing more electricity increases to pay an unsustainable debt to the bondholders,” said Cristina Palacios, director of the League of Cities, a member of the Multisectoral Meeting. “Tropical Storm Ernesto reminded us again of the urgent need to rebuild a reliable and resilient electric system, something that will not be possible if we divert billions of dollars to pay GoldenTree and the other bondholders.”
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