A plan to modify outstanding Puerto Rico Industrial Development Company debt with an upfront cash payment and a new series of longer-dated taxable bonds, which had overwhelming support of bondholders, was approved by U.S. District Court Judge Laura Taylor Swain Wednesday.
The PRIDCO bonds, federally taxable, have $150 million in principal outstanding ($189.6 million when including unpaid interest).
The deal specifies that $30 million of cash will be paid to bondholders and new bonds with face value of $159.6 million will be issued. Existing bonds mature from 2018 to 2028, while the new bonds will mature in 2053.
The existing bonds yield 5.2% to 6.7% while the new taxable bonds will yield 7% for the first three years and 8.75% after.
The restructured bonds would be callable at par for the first three years, 104% for the following three years, declining 0.5-percentage points per year to par.
None of the original PRIDCO bonds outstanding are insured.
Interest and principal payments on PRIDCO bonds stopped in July 2016. As part of a forbearance agreement, $11.4 million in payments were made from July 2021 to October 2022.
Of the $150 million, holders of $142 million of principal voted. Of those that voted, 99.99% voted in favor of the deal.
The deal is expected to close before year end.
The deal was reached through the consensual provisions of Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act.
GoldenTree Asset Management, the largest bondholder, negotiated the bond restructuring over several years. Susheel Kirpalani, partner at Quinn Emanuel Urquhart & Sullivan, and Rafael Escalera, capital partner at Reichard & Escalera, represented GoldenTree.
GoldenTree is one of the leading opponents of the board’s proposed Puerto Rico Electric Power Authority plan of adjustment.