PREPA makes additional disbursements for Whitefish as bills continue to rack up - Debtwire

PREPA makes additional disbursements for Whitefish as bills continue to rack up

07 February 2018 - 12:00 am

Bills to the Puerto Rico Electric Power Authority (PREPA) from Whitefish Energy tally USD 144.9m as of last week, Christian Sobrino Vega, Governor Ricardo Rossello’s designee to the Financial Oversight and Management Board, told Debtwire Municipals.


PREPA has paid USD 36.7m of that total, leaving a pending balance of USD 108.2m, said Sobrino, who was unable to specify whether the billing or payment figures will continue to rise. Sobrino also serves as the president of the Government Development Bank for Puerto Rico and chairman of the Puerto Rico Fiscal Agent and Financial Advisory Authority.


At USD 144.9m, Whitefish has already billed nearly half of its USD 300m contract, awarded on 26 September and effectively cancelled on 30 November following mounting allegations of a dubious contracting process.


The new amount represents a substantial, USD 28.3m or 24% increase from early December, when total billing stood at USD 116.6m. PREPA, meanwhile, has since paid an additional USD 9.5m or 35%, with disbursements increasing from USD 27.2m to the current USD 36.7m. The Federal Emergency Management Agency has stated it won’t be reimbursing any part of the Whitefish contract. 


Whitefish is among numerous PREPA creditors objecting to a request by the Financial Oversight and Management Board to have the commonwealth extend a USD 1.3bn postpetition financing to the ailing utility company. PREPA is one of several Puerto Rico entities that have filed for bankruptcy under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act.


The oversight board has argued the commonwealth loan is the best option to inject liquidity into PREPA, especially since Puerto Rico is still awaiting the final approval and disbursement of more than USD 4bn in federal community disaster loans. PREPA has burned cash in a hurry following Hurricanes Irma and Maria, and could run dry as soon as this month or the next.


The oversight board and PREPA creditors are set to clash over the proposed USD 1.3bn financing during a 15 February hearing.


Parallel to PREPA’s bankruptcy, which encompasses the utility’s USD 9bn in debt outstanding, Governor Rossello has announced plans to privatize PREPA – a process that could bode poorly for the utility’s creditors.


A USD 307.5m tranche of Series 2013A power revenue bonds with a 6.75% coupon and due 2036 last traded at a high of 35.3 on 25 January, no yield, according to Electronic Municipal Market Access. The bonds were last rated D by Fitch Ratings on 19 December 2017, Ca by Moody’s Investors Service on 6 July 2017, and D by S&P Global Ratings on 30 June 2016.