A $3 Billion Good-Faith Offer to Conclude the Last Chapter of Puerto Rico’s Debt Crisis and Deliver Reliable, Affordable Power
San Juan, PR – June 30, 2026 – The Financial Oversight and Management Board for Puerto Rico announced that it proposed a settlement to bondholders of the Puerto Rico Electric Power Authority (PREPA) as part of its effort toward substantially reducing total asserted claims by various creditors and ending PREPA’s bankruptcy under Title III of PROMESA.
On June 1, 2026, the Oversight Board proposed payment of cash or issuance of new bonds, or a combination of both in the amount of $3 billion to be distributed to PREPA’s non-settling bondholders. This settlement offer would amount to an additional $1.4 billion to the consideration to be provided to non-settling bondholders under the current Plan of Adjustment. The $3 billion settlement would amount to a recovery of approximately 35% on the non-settling bondholders’ petition date claims of around $8.5 billion, compared to a recovery of approximately 19% provided under the current Plan. The source of any cash payment or payment of debt service on new bonds has not been finally determined.
The settlement offer filed on the Electronic Municipal Market Access (EMMA) system is attached. The Oversight Board has been advised by the lead mediator that the advisors to the bond parties are not recommending to their clients that they become ‘restricted’ from trading by receiving the offer and is taking this action to publicly disclose the offer.
“We need to resolve PREPA’s bankruptcy,” said the Oversight Board’s Executive Director Robert F. Mujica, Jr. “Puerto Rico must be able to close this last chapter of its fiscal crisis and move forward. Ending PREPA’s Title III case is essential to Puerto Rico’s recovery — to the reliable, affordable electricity and the new investment its residents and businesses deserve. We continue to believe a mediated consensual resolution of remaining disputes in PREPA’s Title III case is possible.”
The settlement offer reflects the direction of the U.S. District Court for the District of Puerto Rico, which has jurisdiction over PROMESA, to continue mediation to attempt to reach a consensual agreement to resolve PREPA’s debt crisis. The Court has urged the parties to make progress towards an agreement, an obligation the Oversight Board is taking very seriously.
“The Oversight Board has moved substantially — through both our Plan of Adjustment and now in mediation — to reach a fair and fiscally responsible resolution,” Mujica said. “This offer represents a serious, good-faith path to conclude this case, and we urge the non-consenting bondholders to accept it and bring PREPA’s bankruptcy to a close — in the best interest of creditors, PREPA, and the people of Puerto Rico, who deserve reliable and affordable electricity.”
Several creditors, including fuel line lenders and unsecured creditors along with some bondholders have already agreed to the Oversight Board’s Plan of Adjustment to restructure PREPA’s debt, and those agreements will remain in place. While the Oversight Board has now increased its offer, the majority of bondholders have so far neither agreed to the Plan nor made a counterproposal to resolve the impasse.
The PREPA Plan of Adjustment proposes to resolve more than $10 billion of total debt to all non-pension creditors, including bondholders, fuel line lenders, and unsecured creditors. If bondholders accept the settlement proposal, total recovery for all non-pension creditors would be $4 billion.
In addition, the Oversight Board indicated it was willing to negotiate a contingent value instrument (CVI) based on actual increases of PREPA’s net cash flow from volumes of power sold above the projections of PREPA’s certified 2025 Fiscal Plan. The proposed CVI would pay bondholders a negotiated percentage of the increased cash flow if electricity volumes exceed the projected volumes, and increased cash flow exceeds projected cash flow. PREPA would not pay under the CVI when the volume increases more than projections if the net cash flow does not also increase.
The Oversight Board has completed 12 debt restructurings for Puerto Rico through consensual and fiscally responsible agreements with bondholders, among other creditors, so far eliminating more than $55 billion in debt payments over 40 years.
The current members of the Oversight Board all supported the completed consensual restructurings since their respective appointments, including the restructuring for the Commonwealth and other entities that were also supported by the majority of bondholders in PREPA’s bankruptcy case.
The Oversight Board continues to believe that good-faith negotiations, as in previous restructurings, offer the best way to also resolve the PREPA debt efficiently and in a manner that serves the interests of Puerto Rico’s residents, businesses, and electric system. It will continue to evaluate all available options to achieve a fair, sustainable, and legally sound resolution of PREPA’s debt restructuring.