Puerto Rico's debt-laden power utility, PREPA, has extended forbearance agreements with bondholders and lenders that will allow it to keep negotiating a restructuring deal with other creditors, it said on Thursday.
PREPA, facing more than $8 billion in debt, said in a statement that it had extended through Oct. 30 an agreement that was to expire Thursday night, preventing creditors from calling a default and suing the agency as restructuring negotiations go on.
The lenders and bondholders who signed the extension have already agreed to a restructuring deal with PREPA, but the agency needs the support of bond insurers like Assured Guaranty and MBIA's National Public Finance Guarantee for the deal to work.
PREPA said it will use the extra eight-day window to try to nail down terms with the insurers, who are not parties to the forbearance agreement and could potentially sue PREPA or push for a financial receiver.
"We continue to make progress in our comprehensive transformation that shares the burden among key stakeholders," PREPA Chairman Harry Rodriguez said in the statement.
The forbearance agreement was first signed in 2014, when restructuring talks at PREPA got underway.
Sides have extended it many times since. The insurers were initially party to the agreement, but exited earlier this year and have since turned up the heat on PREPA, threatening legal action and resisting concessions even as bondholders and lenders agreed to haircuts.
The deal signed by those creditors would involve a 15 percent reduction in payment in exchange for new, higher-rated debt.
Sources familiar with the negotiations told Reuters this week that PREPA and the insurers are making significant progress, and are confident they will reach a deal.
PREPA is a key piece of Puerto Rico's debt puzzle, and resolving its financial woes could go some way toward helping the island tackle its larger $72 billion debt load.
(Reporting by Nick Brown; Editing by Kim Coghill)
Puerto Rico's PREPA again extends creditor agreements
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