Bondholders of the Puerto Rico Electric Power Authority (“PREPA”), including GoldenTree Asset Management, LP, Assured Guaranty Inc., and National Public Finance Guarantee Corporation (collectively, the “PREPA Bondholders”), today issued the following statement:

“On November 13, the United States Court of Appeals for the First Circuit confirmed its June 12 ruling that PREPA’s $8 billion plus of revenue bonds are secured by a properly perfected lien on PREPA’s past, present and future net revenues. Make no mistake, the bondholders won, and the Financial Oversight and Management Board (the “Board”) lost. We expected such a clear vindication of creditor rights to result in good faith negotiations towards a resolution of PREPA’s bankruptcy case. Instead, in its recent public statement the Board has made clear that it intends to distort and ignore the clear holdings of the First Circuit’s decisions in favor of pursuing more avoidable litigation to the detriment of PREPA and the people of Puerto Rico.

The bondholders have proposed to resolve the PREPA case on terms that will promptly advance the interests of Puerto Rico in having a reliable power system, while ensuring that both electricity charges are fair and affordable and that the bondholders’ rights are respected. We have done so even though the Board and PREPA have reneged on three prior settlement agreements. These prior settlements would have already ended the seven year long bankruptcy, helped restore stability to PREPA’s operations and finances, and ultimately returned Puerto Rico’s proper self-governance. But rather than engaging now, the Board is instead spending more of PREPA’s money to chase yet another appellate review of the very same issues the Court has already now decided twice in the bondholders’ favor, keep itself in power, and further delay PREPA’s exit from bankruptcy.

By choosing to continue to fight and refusing to accept the First Circuit’s multiple rulings, PREPA’s seven-year bankruptcy case and the Board’s tenure in Puerto Rico is further extended; PREPA is deprived of access to the public bond market; and most importantly, PREPA is unable to do what is needed to provide reliable electric power to the people and businesses of Puerto Rico. And all the while, the people of Puerto Rico are forced to bear the burden of paying the Board’s high-priced advisors’ fees. Such fees exceed $1.5 billion in the aggregate for all Puerto Rico bankruptcy cases, and as a result of the Board’s litigation strategy costing more than $50 million per year, now exceed $400 million for PREPA alone. If the Board had brought PREPA’s bankruptcy to a rational conclusion, these amounts would have been sufficient to service over $1.5 billion of new PREPA bonds that could now be providing the people of Puerto Rico what they actually want and really need—a reliable electric power system.

With PREPA under the Board’s direction since 2017, seven years have now been lost. Hundreds of millions, if not billions, of dollars have been wasted. What value have the people of Puerto Rico received from the expenditure of such fees? Under the Board's oversight, PREPA has been unable to improve its performance according to industry-accepted metrics, enhance its financial transparency, or – perhaps most disturbingly – meaningfully access the unprecedented $15 billion in congressional funding aimed at upgrading and hardening the power grid in Puerto Rico. Instead, much of PREPA’s infrastructure remains in a state of disrepair, and the people of Puerto Rico continue to suffer the ails of an aged, broken-down power system. PREPA’s endless stay in bankruptcy is the common, contributing factor in all these failures.

In contrast, investors who hold over 60% of PREPA’s revenue bonds have offered a prompt end to the PREPA bankruptcy premised on five simple points:

(1) we will accept 50-year replacement bonds that have virtually no risk of future default;

(2) the amount of those bonds would be set on the basis of reasonable up-to-date load and other projections (the Board has failed to update PREPA’s fiscal plan since 2023 or even provide updated projections);

(3) we would get additional bonds for the shortfall between what we are owed and the amount of the replacement bonds—but these bonds would only get paid from excess cash flow, if there is any, and would be retired in 50 years whether or not the bondholders have been paid anything;

(4) we will provide $2.5 billion of new 50-year revenue bond funding to begin paying for the desperately needed repair and improvement of PREPA’s electric generation and distribution system; and

(5) for the duration of the replacement and new 50-year bonds, electric costs would be set and held at a level the Board has stated would be fair and affordable, subject to being increased only to fund cost over-runs or needed capital expenditures not covered by our new bonds or the $15 billion of FEMA funding (which the Board has failed to utilize).

Unwilling to accept its First Circuit losses, the Board seems intent on extending its stay and control in Puerto Rico and leaving PREPA in bankruptcy indefinitely while manufacturing unprecedented and unsupportable legal arguments and allowing its advisors to continue charging grossly excessive fees. In any normal case, established claims would be respected, and the parties would forge a solution that works for all sides. We have put such a solution forward. Given the Board’s refusal to move towards a consensual resolution of PREPA’s seven-year bankruptcy case to facilitate the provision of reliable electricity to the people of Puerto Rico, can the Board really claim to be working in good faith to meet the needs of the people of Puerto Rico?”

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