President and CEO of Assured Guaranty Dominic Frederico |
"We believe the restructuring transaction outlined in the RSA can be the foundation for a consensual settlement that fosters modernization, long-term sustainable rates for ratepayers and continued access to efficient capital markets financing for Prepa," said President and CEO of Assured Guaranty Dominic Frederico. "We are committed to continue working cooperatively with Prepa and other stakeholders to implement the terms of Prepa's recovery plan."
Assured Guaranty’s share of the Prepa bridge financing is approximately $15 million. Upon finalization of the restructuring transaction, insured Prepa revenue bonds (with no reduction to par or stated interest rate or extension of maturity) will be supported by securitization bonds issued by a special purpose corporation and secured by a transition charge assessed on ratepayers.
To facilitate the securitization transaction, Assured Guaranty will issue surety insurance policies in an aggregate amount not expected to exceed $113 million in exchange for a market premium to support a portion of the reserve fund for the securitization bonds.
The closing of the restructuring transaction is subject to certain conditions, including enactment of the Prepa Revitalization Act by the Puerto Rico legislature.
Last July, Assured Guaranty purchased $113 million of interest bearing bonds from Prepa . The bond proceeds were used to make a $416 million payment of principal and interest due to the utility's bondholders on July 1. The final principal payment on the bonds, along with interest, is due on January 1, 2016.
“This interim solution allows Prepa to make the scheduled principal and interest payments due July 1, giving all parties time to negotiate a permanent, consensual restructuring,” said Frederico at the time. “Regardless of future developments, debt service payments to holders of Assured Guaranty-insured Prepa bonds remain protected by our guaranty."
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