Hedge Funds Campaign For Puerto Rico Power Authority Debt Relief
NEW YORK (The Deal) -- As the Puerto Rico Electric Power Authority faces a Thursday forbearance agreement expiration and a daunting Aug. 14 debt maturity, an ad hoc group of 19 hedge fund bondholders is evaluating ways to provide financing and support to the commonwealth, including providing debtor-in-possession financing, according to some sources.
One source following the situation said the ad hoc group is meeting with Puerto Rico's financial advisers at Millco Advisors LP soon to "orchestrate a campaign" for the hedge funds to support the new restructuring framework that was signed into law on June 28.
A different source familiar with the situation contended that the ad hoc group is focused on supporting Puerto Rico in its efforts to reduce its debt load while preserving the pledge of Puerto Rico's good faith, credit and taxing power for four types of bond issuances -- general-obligation bonds issued by the commonwealth, as well as debt issued by the Government Development Bank for Puerto Rico, the Public Buildings Authority, and COFINA, an issuer that's backed by sales taxes.
The source said the ad hoc group is "broadly supportive of Puerto Rico's efforts to protect those four bonds. ...The group's position is not tied to the recovery act."
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