Puerto Rico Utility Official Expects Extension to Creditor Pact

Puerto Rico’s power utility is expected to extend an agreement with its creditors that’s set to expire Thursday evening, an agency official said.

Lisa Donahue, the utility’s chief restructuring officer, said in a speech Thursday in San Juan that the contract will probably continue. The agreement has prevented the utility from defaulting on its debt. Bondholders have offered a 30-day extension, according to a person with knowledge of the situation.

“Although the forbearance agreement expires today, we expect an extension,” Donahue said during a Puerto Rico Manufacturers Association conference.

Prepa, as the Puerto Rico Electric Power Authority is known, has $8.6 billion of securities. Under the bondholder offer, the electricity provider would give creditors a restructuring plan by June 1, said the person, who requested anonymity because an agreement hasn’t been reached.

Bondholders, insurance companies and banks signed a contract with Prepa in August that put off default. The group has previously agreed to extend it when it was set to expire.

“Prepa will issue a statement about a forbearance extension at the appropriate time, but will not be answering questions prior to the statement,” Yenis Abraham Gonzalez, a spokeswoman for the utility, said in an e-mail.

by Michelle Kaske

Puerto Rico Utility Official Expects Extension to Creditor Pact