Puerto Rico approves bill to restructure power company

SAN JUAN, Puerto Rico – Legislators in Puerto Rico have approved a last-minute bill needed to finalize a deal to restructure the U.S. territory’s heavily indebted public power company.

The measure passed late Monday with the minimum 26 votes needed from the island’s House of Representatives. Twenty-two legislators voted against the bill, which seeks to reduce the company’s $9 billion debt as well as diversify energy resources and boost public-private partnerships to overhaul aging infrastructure at the largest U.S. public power utility.

The island’s Senate is now expected to review the bill and vote on it. Bondholders had threatened to go to court if the bill was not approved by Tuesday’s deadline.

The Puerto Rico Electric Power Authority reached a restructuring deal late last month with bondholders. It said the bondholder group and other creditors would provide $111 million through the purchase of new bonds. Half the notes would be issued once the bill is passed and the other half once the securitization structure is submitted to an energy commission.

The power company said the deal requires bondholders and monoline insurers to buy 50 per cent of the bonds once the bill is approved. However, the deal only involves those holding 70 per cent of the agency’s debt.

The company has warned it would run out of cash by summer without debt restructuring.