The Financial Oversight and Management Board for Puerto Rico and The Puerto Rico Fiscal Agency and Financial Advisory filed with the U.S. Bankruptcy Court an urgent motion for entry of interim and final orders (a) authorizing post-petition secured financing, (b) granting priming liens and providing super-priority administrative expense claims, (c) modifying the automatic stay and (d) scheduling a final hearing.
The motion notes that the Commonwealth has urgent need to access “the Facility consisting of $1.3 billion in the form of a senior secured priming super-priority revolving credit facility, with authority to borrow up to $550 million available on an interim basis pending entry of the Final Financing Order (the ‘Initial Borrowing’), subject to and pursuant to the terms and conditions set forth in the Interim Financing Order, the Final Financing Order, and the Credit Documents.” The motion explains, “Despite the Debtor’s very public need for emergency financing, no financing of the magnitude required to address the Debtor’s pending liquidity crisis has been earnestly offered by any parties other than the financing sought through this Urgent Motion.”
In addition, “Shortly after Hurricanes Irma and Maria, the Debtor received an unsolicited, publicly announced offer for financing from a group of holders of its Power Revenue Bonds. That offer was for $1 billion of financing, but was tied to a roll-up of $1 billion in existing bonds into an additional $850 million of post-petition financing (which would have resulted in a senior credit facility of $1.85 billion, out of which $1 billion of cash would have been available for advancement to the Debtor)….Beginning on January 21, 2018, the Debtor, through Rothschild, initiated a marketing effort to obtain alternative financing. As part of that process, Rothschild, with the assistance of advisors for the Debtor and AAFAF, prepared marketing materials and assembled a data room populated with relevant diligence information. In consultation with the advisors to the Oversight Board, professionals from Rothschild have been in contact with ten potential funding providers, which consisted of four existing PREPA, Commonwealth, and COFINA bondholders and bondholder groups, and six third-parties capable of providing financing of this magnitud.”
The motion continues, “To date, seven of these prospective lenders have signed non-disclosure agreements (‘NDAs’) (or are operating under existing NDAs) and have been provided access to the data room maintained by Rothschild containing relevant information on the current financial conditions of the Debtor. Rothschild has requested interested parties to submit initial indications of interest by February 2, 2018.”
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