(Adds details about PREPA feedback, plan proposed, meeting)
By Nick Brown and Megan Davies
NEW YORK, June 23 (Reuters) - Puerto Rico’s distressed power authority, PREPA, will meet in New York on Thursday with its creditors, which have offered a new debt restructuring plan in response to a PREPA proposal earlier this month, three people familiar with the talks told Reuters.
The creditors’ plan is based on the same capital expenditure and other financial assumptions that are in PREPA’s plan, but it would give the debt more favorable treatment, said the people, who declined to be named because talks are private. The new proposal offers more relief to PREPA than the original plan, said one source.
PREPA was receptive to the proposal and has given constructive initial feedback, that source said. More detailed feedback is expected from PREPA on Thursday.
The talks are seen as a forerunner to whether the U.S. territory can fix other broken public entities as it tries to climb out of a $73 billion debt hole.
PREPA is trying to restructure some $9 billion in debt but faces push-back from creditors loath to take reduced payouts. Restructuring talks are in crunch time, with PREPA facing a July 1 interest payment it has said it cannot afford.
The utility also announced on Tuesday that its chief executive Juan Alicea-Flores had resigned.
Sides will meet at 9 a.m. at the Manhattan offices of PREPA’s lawyers, Cleary Gottlieb Steen & Hamilton, said the people. The meeting is expected to last a couple of hours, one of the sources said.
PREPA’s initial plan, unveiled at a June 1 meeting also hosted by Cleary, was met with near-universal reproach from creditors, though details of how it would treat their debt were kept private.
The utility must either strike a consensual deal with creditors by July 1, or face a choice between making the roughly $400 million interest payment, or skipping it and risking litigation from creditors.
One of the sources said they expected the utility to achieve a consensual deal before that deadline, but said negotiations could go beyond if PREPA were to make the July 1 payment.
PREPA is currently shielded from litigation under a forbearance agreement with creditors that lapses on June 30.
Parties to the forbearance agreement include bank lenders and an ad-hoc bondholder group made up of hedge funds such as Appaloosa and institutional investors such as OppenheimerFunds and Franklin Advisers, according to the original forbearance agreement.
Bond insurers, including Assured Guaranty and National Public Finance Guarantee, are also parties to the deal.
A spokeswoman for PREPA did not immediately respond to a request for comment on Tuesday.
Reporting by Nick Brown; Editing by Steve Orlofsky and Andrew Hay