After 76 years as the state government monopoly of Puerto Rico, the Electric Power Authority (PREPA) was declared bankrupt by the Fiscal Control Board (FCB) with approximately $ 10 billion in debt, including suppliers, bondholders and its active and retired employees.

After announcing it last week, theFCBformalized the bankruptcy petition ofPREPAon Sunday night in a filing that detailsthe debts of the public corporation as well as its Fiscal Plan that had been certified but not published until now.

The filing occurred a day after the $450 million debt maturitydue on Saturdaythat the corporation could not pay. At the same time as the bankruptcy case is diluted, the FCB expects to continue negotiations with creditors under a ‘Title III hybrid’ system in which only debt with the bondholders is renegotiated, while the rest of the debt of the public corporation Is subject to restructuring without repayment guarantee. The negotiating terms of the Board also call for the agency to move to privatization.

The agreement with creditors since the multimillion-dollar hiring of the Exoficial Restructuring Officer, Lisa Donahue, was dismissed by the FCB because, ‘based on the opinion of its economic advisors, the (Board) was concerned to make it more expensive to live and conduct business In Puerto Rico would make it impossible to end the economic decline in Puerto Rico and achieve sufficient positive growth to restore Puerto Rico’s overall economic health.’

PREPA ‘will function normally, and the PREPA case under Title III will not affect its ability to continue to provide services to its customers on an uninterrupted basis or to meet its current obligations to its employees and other essential suppliers,’ saidin a statementGerardo Portela Franco, Executive Director of the Fiscal Agency and Financial Advisory Authority of Puerto Rico (AAFAF).

‘Low investment in infrastructure, substandard policies and labor problems lead to the PREPA having a security system and a safety record dramatically below industry standards,’ said the Boardin its Title III request.

Along with the request, the FCB submitted a request for the court to approve an extension until October31, 2018 of the fuel supply contract with Freepoint Commodities LLC, which currently supplies fuel worth $ 70 million per month under a lineff credit of $ 250 million with payment window of 42 days.

The current scenario of PREPAsubmitted bythe Boardto the Federal Court to support the bankruptcy petition states:

– Debts of over $ 10 billion, including $ 8.3 billion in bonds based on service fee repayment, $ 700 million in fuel loans, and $ 35 million in a credit line with the Government Development Bank.

– Accounts payable of $ 480 million with fuel and cogeneration suppliers, rents, professional services contracts, security, fleet and construction, among others.

– Annual payroll of $ 530 million.

– 10,000 retired employees whose retirement plan is short for between $ 1,700 to $ 2,200 million and that also carry other costs for $ 384 millionwith no source of payment.

– About $ 1.5 billion projected in legal claims that include class suits.

– An obsolete infrastructure with a 44-year-old average at its plants when the industry-wide average is 18 years.

– These plants face forced blackouts at a rate 50% higher than the historical averages in the United States, a fact that is increasingly witnessed by subscribers and which was the subject of a political denunciation on Sunday.

For the list of top 20 creditors and bankruptcy filing for the Board, see the links below.

Creditors Matrix PREPA_25958

Bankruptcy Filing PREPA_25959