HAMILTON, Bermuda--(BUSINESS WIRE)--Assured Guaranty Ltd. (NYSE:AGO)(together with its subsidiaries, Assured Guaranty) released the following comments regarding Puerto Rico Governor Rossello’s statement regarding the future of the Puerto Rico Electric Power Authority (PREPA):
Assured Guaranty, like all of Puerto Rico’s residents, is eager for PREPA to be operated more efficiently and reliably. Along with many other stakeholders, we have promoted operational improvements and a wide range of reforms for years. It is long overdue for the Commonwealth, the PROMESA Oversight Board, and creditors to agree on an experienced, highly qualified manager able to impose order, transparency and accountability on PREPA. Once that happens, a variety of new strategic alternatives can be explored, including ideas such as those mentioned by the Governor in his address yesterday.
As we continue to try to move forward constructively, all parties should keep in mind that bondholders and monoline insurers are secured creditors of PREPA. For years Assured Guaranty has offered forbearance agreements, liquidity, and concessions as reflected in the Restructuring Support Agreement (RSA) that was approved by two successive Puerto Rico Administrations. Unfortunately, that RSA was rescinded by the Oversight Board in contravention of PROMESA law and Congressional direction, a matter that moved interaction from consensual to litigative.
Furthermore, when creditors had no option but to exercise their rights under Commonwealth law to install a competent and professional independent Receiver for PREPA who could implement sound, depoliticized management and an effective long-term energy generation and transmission strategy, both the Oversight Board and Commonwealth objected. A qualified, experienced Receiver might have begun improvements many months ago that could have given the electricity system more resilience to withstand and recuperate from hurricanes. A respected Receiver could have also acted as a credible coordinator of federal aid for PREPA. Instead American citizens in Puerto Rico continue to suffer.
PREPA bonds are secured by a lien on the system revenues, and supported by covenants and Puerto Rico law ensuring that rates must be sufficient to cover all costs including debt service. Under PROMESA and the United States Constitution, the system cannot be sold free and clear of the lien on revenues unless the lien is discharged through full payment of the bonds, there is adequate coverage of debt service after any sale of assets, or the bonds are given the full value of their collateral through a confirmed plan of adjustment. Rather than force litigation, or operate in secrecy, we urge the Commonwealth and Oversight Board to collaborate meaningfully with stakeholders on consensual plans.
Given recent and continuing revelations about PREPA – including the apparent uncovering of unutilized restoration materials in a PREPA warehouse, the infamous Whitefish contract, and other allegations of impropriety – any new privatization partners or investors will rightly first look at respect for the rule of existing law, and the credibility and transparency of both Island leadership and the Oversight Board. We continue to look forward to engagement from the Commonwealth and Oversight Board to consensually help improve PREPA and the quality of life of Puerto Rico residents.
Any forward-looking statements made in this press release reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from litigation, the inability of stakeholders to reach consensual agreements, the inability to replace current PREPA management, the inability of a future receiver to improve PREPA operations and other risks and uncertainties that have not been identified at this time, management's response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of January 23, 2018. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
