Reflects PREPA Fiscal Plan Projections; Removes Legacy Charge;
Honors Previously Agreed Settlements; Continues to Include $2.6 billion of Base Consideration for creditors in Cash or Bonds
San Juan, PR – March 28, 2025 – The Financial Oversight and Management Board for Puerto Rico announced today that it filed the Fifth Amended Plan of Adjustment to reduce more than $10 billion of total asserted claims by various creditors against the Puerto Rico Electric Power Authority (PREPA), reflecting the projections and findings of the new PREPA Fiscal Plan.
The Plan would reduce PREPA’s debt by almost 80%, to the equivalent of $2.6 billion in cash or bonds, excluding pension liabilities. The Fifth Amended Plan incorporates several amendments to the previous structure, including a Rate Reduction Fund to support PREPA’s pensions, and the elimination of the Legacy Charge contemplated in previous versions of the Plan to repay the significantly reduced debt. The Fifth Amended Plan also removes the Contingent Value Instruments, and consenting creditors will instead be entitled to share excess payment capacity that could result from prevailing in litigation over certain non-settling bondholders.
The Fifth Amended Plan honors the settlements previously reached with creditors holding approximately 44% of PREPA’s debt, and the Oversight Board continues to mediate with creditors through the U.S. District Court’s mediation process. PREPA may still issue up to $2.6 billion of bonds, which will be repayable on a fixed amortization schedule over 35 years from PREPA’s net revenues. The Oversight Board will be working with the Government to identify the source of funds to support the potential cash or bond recovery for creditors proposed in the Plan.
“The new PREPA Fiscal Plan clearly shows the Puerto Rico energy system is more costly to keep running than previously projected,” said Oversight Board Executive Director Robert F. Mujica, Jr. “Given the significant resources required to bring the system into a state of being able to provide reliable and sustainable power the Oversight Board concluded that PREPA will not be able to impose any additional rate increases for debt service above the rates necessary to pay for the costs of properly operating the energy system.”
“The Oversight Board is nevertheless committed to end PREPA’s bankruptcy,” Mujica said. “We amended our Plan of Adjustment to achieve two goals: providing a fair recovery for creditors and allowing PREPA to operate more reliably. All of us – Oversight Board, Government, and creditors – must work together to keep the lights on in Puerto Rico. Otherwise, nobody wins.”
The members of the Oversight Board certified the new PREPA Fiscal Plan on February 6, 2025, that reflects the investments needed to adequately repair and operate a deteriorating energy system, so PREPA can provide more reliable electricity today and in the future.