The Puerto Rico Oversight Board filed a possible final Highways and Transportation Authority plan of adjustment with the bankruptcy court Tuesday.
Puerto Rico bankruptcy Judge Laura Taylor Swain in late August called for the board to make changes to the plan and related documents.
The board’s latest plan of adjustment responds to those requests. Following Swain’s order, the board has made changes to the plan of adjustment negotiated between Assured Guaranty and two investment funds that hold HTA bonds insured by the bond insurer.
In this version, Assured and the investment funds agree to let their differences remain and to allow the funds to contest Assured’s actions at a later date, if they choose.
The plan as amended reinforces that eminent domain/inverse condemnation claims will be paid in full unless the board’s petition for certiorari to the U.S. Supreme Court is successful.
Along with the plan, the board filed a HTA plan resolution, a revised plan confirmation order, a revised proposed findings of fact and conclusions of law document, and an amended plan supplement.
Swain may approve the HTA plan of adjustment and related documents in the next few weeks, according to a source close to the board.
According to the terms of the HTA plan of adjustment, holders of $4.3 billion of HTA bonds would receive $1.2 billion of new bonds with 5% coupons and $389 million of cash. The generosity of the deal depends on what type of HTA bond is held.
Holders of HTA bonds may also receive recoveries through clawback contingent vehicle instruments on account of HTA claims against the commonwealth.
The plan settles about $2.2 billion of outstanding loans held by the Debt Recovery Authority, the successor of the Government Development Bank for Puerto Rico.
About $1.2 billion of the original par value is uninsured and the rest is insured by Assured Guaranty, National Public Finance Guarantee, Financial Guaranty Insurance Corp., and Ambac Assurance.