UPDATE 2-Puerto Rico utility in tentative agreement to restructure debt -sources
(Changes sourcing, recasts throughout)
By Nick Brown and Megan Davies
SAN JUAN/NEW YORK Dec 18 (Reuters) - Puerto Rico's debt-laden power utility, PREPA, has a tentative agreement with its bond insurers on a restructuring of its debt, according to two sources familiar with negotiations, but the deal is not official and still needs approval by PREPA's board.
PREPA's monoline insurers would provide a surety bond of about $450 million to shore up new bonds being offered under a related restructuring deal with bondholders and lenders, the sources said. The deal was first reported by Bloomberg News. (bloom.bg/1Ym7Rsn)
A third person familiar with negotiations said it is too early to assume the deal will get done, as PREPA's debt talks are contentious and fluid. A spokesman for PREPA and a spokeswoman for Puerto Rico's government development bank had no immediate comment.
The first two sources stressed that the deal was not official, with one source adding it still requires the signing of term sheets and the eventual approval of PREPA's board.
A previous agreement between the parties, reached in early December, was further along than this one when it fell apart before earning the PREPA board's approval. Accounts differ as to what sank the deal, with some sources blaming PREPA for yanking it at the last minute, and others claiming insurers revised demands.
Overhauling PREPA, which faces more than $8 billion in debt, is seen as key to fixing Puerto Rico's economy, which is hamstrung by a 45 percent poverty rate, a shrinking population and some $70 billion in debt.
Under a restructuring reached in September, PREPA's bondholders and lenders agreed to accept 15 percent repayment reductions in exchange for new, healthier bonds. Continuación...