San Juan, PR – May 2, 2025 – The Financial Oversight and Management Board for Puerto Rico today issued the following statement:
Recent statements by the non-settling bondholders of the Puerto Rico Electric Power Authority (PREPA) ignore the reality of PREPA and Puerto Rico.
Led by hedge funds, this group of creditors, who do not represent all PREPA bondholders, said they are asking for a reasonable agreement. The PREPA Plan of Adjustment the Oversight Board has proposed to the U.S. District Court for the District of Puerto Rico is such a reasonable agreement and has received the support of 44% of PREPA’s financial creditors. It would resolve PREPA’s bankruptcy on fair and sustainable terms.
Yet, PREPA remains bankrupt because those non-consenting bondholders continue to demand that the people of Puerto Rico pay them full principal and interest, which according to a recent public filing with the Puerto Rico Energy Bureau adds up to $12 billion1. This would require the Energy Bureau to add a surcharge of, on average, more than 8 cents per kilowatt-hour over 50 years.
Certain bondholders were buying PREPA bonds after PREPA already entered the bankruptcy process under Title III of PROMESA. Everybody agrees that decades of mismanagement before bankruptcy left PREPA in far worse condition than many anticipated, including creditors who now ask the people of Puerto Rico for a bailout that would seriously harm its economic recovery.
The true state of PREPA is now obvious to all. Nonetheless, these bondholders continue to demand $12 billion. Full payment of PREPA’s bond debt, plus interest, is unaffordable.
Congress gave the Oversight Board a clear mandate to solve Puerto Rico’s debt problems, and the Oversight Board is determined to fulfill this mandate in letter and spirit. The Oversight Board agrees with the bondholders that it is in the best interest of Puerto Rico for the PREPA Title III process to come to an end as soon as possible. The non-consenting bondholders essentially hold the process hostage with demands that the people of Puerto Rico simply cannot afford.
While the Oversight Board represents PREPA in its bankruptcy, it does not operate PREPA day-today. Through PROMESA, Congress mandates that the Oversight Board help Puerto Rico and its instrumentalities achieve fiscal responsibility, and the Oversight Board has offered bondholders responsible terms for a fair recovery that 44% of PREPA’s financial creditors accepted.
The Oversight Board previously reached consensual deals with creditors for 10 other bankrupt government entities. All Puerto Rico debt restructurings completed so far have been consensual. The Oversight Board continues to try to build on that record.
The amended Plan of Adjustment the Oversight Board proposed is necessary for PREPA to remain a sustainable utility, provide reliable energy, and support Puerto Rico’s economic growth and fiscal stability. The Oversight Board hopes that even those non-consenting bondholders will eventually understand the economic reality Puerto Rico faces today, understand what is possible, what is necessary, and what is fair and finally support ending PREPA’s bankruptcy under terms that restore PREPA as a capable utility.