REFILE-UPDATE 4-Puerto Rico's PREPA bondholders propose $8 bln restructuring - outline

jueves 23 de julio de 2015 18:05 GYT

(Refiles to remove extraneous words in quote in paragraph 7 "lower debt outstanding")

By Nick Brown and Megan Davies

NEW YORK July 23 (Reuters) - A new offer by bondholders of Puerto Rico's public utility PREPA to refinance billions of dollars in debt was criticized by the utility on Thursday and deemed risky by others.

Presented to PREPA on July 7 and made public on Thursday, the bondholders' plan would split about $8 billion of debt into two tranches, with one taking the form of capital appreciation bonds (CABs), under which payments are deferred for many years until a large balloon payment is due at once.

PREPA on Thursday said the plan was "unachievable," and "does not provide a path for successful restructuring."

Bond insurers, who would be on the hook if PREPA defaults, also opposed the plan. Blackstone Group's Tim Coleman, a financial adviser to National Public Finance Guarantee, said it "disproportionately impacts bond insurers' interests."

The proposal is the latest salvo in ongoing restructuring talks between the power utility and its creditors, and counters a June proposal from PREPA that the creditors roundly rejected.

The plan was penned by a group representing 40 percent of PREPA's bondholders composed of investors like Franklin Advisers and BlueMountain Capital. Bondholders own $8 billion of PREPA's total $9 billion debt load.

"Compared to PREPA's most recent proposal, this framework provides better financial terms for PREPA across the board - including lower interest rates, lower debt outstanding, and a longer and more flexible debt maturity profile," said Stephen Spencer, Managing Director, Houlihan Lokey and adviser to the PREPA bondholder group.   Continuación...