UPDATE 3-Puerto Rico's indebted utility PREPA finally reaches creditor deal
(Adds details about conditions to deal)
By Megan Davies
NEW YORK Dec 23 (Reuters) - Puerto Rico's struggling electric power utility PREPA said on Wednesday it has agreed a deal with creditors - including holdout bond insurers - on a restructuring of its debt, a move seen as key to fixing the island's faltering economy.
Puerto Rico has some $70 billion in debt, a poverty rate of 45 percent, and has been in recession for nearly a decade. On Jan. 1 it faces an about $1 billion debt payment and officials have warned of a default on some of that paper.
With debt of more than $8 billion and inefficient operations, PREPA had been one of the crucial public agencies to restructure, and remained separate to a wider restructuring of the island's debt which officials have been attempting.
PREPA said it reached a deal with creditors holding 70 percent of its debt, which comes after months of negotiations and over a year of extensions to a creditor agreement.
"It's a good feeling that we have been able to get disparate creditors together to agree to a path forward," said PREPA's Chief Restructuring Officer Lisa Donahue. "The one thing that made it doable is that everyone recognised there was a problem and that we needed to solve it together."
PREPA, which provides electricity to Puerto Rico's roughly 3.5 million residents, charges consumers far more than the average customers pay in the U.S. mainland and has been under pressure to convert to generally cheaper and cleaner natural gas. Donahue said the utility had been working to improve customer service and that the restructuring plan calls for investment in gas.
A September deal with a group representing about 35 percent of its bondholders saw those creditors agree to swap bonds for new notes, receiving 85 percent of existing bond claims. Bond insurers National Public Finance Guarantee Corporation, a unit of MBIA and Assured Guaranty, however, did not sign on. Continuación...