The Revitalization Corp. of the Puerto Rico Electric Power Authority submitted proposed securitization charge-setting mechanisms to the Puerto Rico Energy Commission.
The submission is another step in the effort by PREPA and its creditors to restructure its operations and debt.
The petition includes a calculation mechanism to assess securitization charges. The petition indicates that the resulting charges will be revised and adjusted on a regular basis (at least every three months) to cover debt service payments.
According to current plans, the Revitalization Corp. would be issuing bonds that PREPA’s existing creditors are expected to accept in place of their current bonds. The new bonds would have par values of 85% of current bonds. Forbearing bondholders have agreed to accept the new bonds if the deal goes through. Stephen Spencer, a financial advisor to the group, said in the fall that he was optimistic that a substantial group of non-forbearing bondholders will also accept the new bonds.
The securitization charges would provide payment for these bonds. The securitization charge for residential clients would be fixed while nonresidential customers would pay a charge per kilowatt hour.
The charges would stand along PREPA’s own charges on customer bills.
Creditors expect PREPA to apply for a new higher rate for its own portion of customer bills by April 18.
PREPA has about $8.4 billion in bond debt outstanding. Any restructuring or default in this debt would be the greatest municipal bond default in United States history.
PREPA didn’t immediately release its petition to the Energy Commission.