Puerto Rico’s electric power authority, which has been in negotiations with lenders over its debt burden, said on Thursday that it had hired the consulting firm AlixPartners to supervise its restructuring.
The assignment will be led by Lisa J. Donahue, the head of AlixPartners’ turnaround and restructuring practice, the authority said in an announcement.
The hiring of a chief restructuring officer was part of a deal reached last month between the electric authority and its creditors.
The authority, which faces a severe cash strain and a mountain of debt, agreed with its lenders to complete a restructuring by next March.
The authority, known as Prepa, faced payments this summer that it could not pay on $671 million in loans to a group of Wall Street lenders. The lenders, including Citigroup, gave the authority more time to make the payments and restructure its finances.
Prepa produces power with oil, which is extremely costly. It has long sought a shift to other power sources, particularly natural gas, but has spent so much on both the oil and debt payments that it has little left over to convert power plants. Its oil-based electricity, which costs twice as much as electricity on the mainland United States, has become so expensive that high electric bills have forced some small businesses to close.
The showdown between Prepa and its lenders came weeks after Puerto Rico enacted a law that allowed many of its public corporations to restructure their debts.
Like states, Puerto Rico is not allowed to file for federal bankruptcy protection, making any restructuring a challenge.
Several Wall Street restructuring specialists, including the law firm Cleary Gottlieb Steen & Hamilton and the advisory boutique Millstein & Company, have already taken up assignments working for various Puerto Rican entities.
Overseeing Prepa’s restructuring is the latest significant assignment for AlixPartners, one of several consulting firms whose specialties include helping reorganize troubled companies. The consultancy played a prominent role in the restructuring of General Motors during the carmaker’s government-sponsored bankruptcy five years ago.
Ms. Donahue’s previous assignments include advising the oil and gas company SemGroup and the power producer Calpine.
Puerto Rico Hires AlixPartners to Lead Restructuring of Power Authority
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