Representatives of Puerto Rico met with some of the islands creditors on Monday. Reuters has reported that they met with creditors to plead for them not to enter into litigation over its $72 billion debt. There has been little information about how the proposed debt restructuring would affect those to whom the commonwealth owes debt.
The meeting with bondholders was held at Citibank’s New York offices. The group of the island’s top officials and advisors reiterated that the U.S. territory’s economy was weak and stated that fixing it would require “pain to be shared by everyone with a stake in its future.”
“We are hopeful we can … avoid adverse consequences that a highly litigated process could result in,” said Jim Millstein in the Reuters article. Millstein is the founder and chief executive officer of restructuring advisory firm Millstein & Co, which is advising the island.
Millstein allegedly warned bondholders that if they decide to follow through with litigation, it “would hurt the commonwealth’s economy, reducing the tax dollars that are the lifeblood of bond payments”.
This meeting comes two weeks after Puerto Rico’s Governor Alejandro Garcia Padilla called for a restructuring of the island’s $72 billion debt and postpone bond payments.
OppenheimerFunds, which is the largest holder of Puerto Rico debt among U.S. municipal bond funds, has repeatedly cautioned the island that it stands ready to defend the terms of bonds it holds.
Former IMF economist Anne Krueger, who co-authored a government-commissioned report released in June, has reportedly stated that “There is some urgency about the entire situation. A delay has costs. If you want to see what those costs are take a look at Greece now.” The June report predicted a depressing future for the island
The Reuters article mentioned that the meeting attracted a protest of about 30 people who yelled “No to the Krueger Plan.”
At the meeting, a presentation was given by Acosta and Krueger, Millstein and Government Development Bank (GDB) head Melba Acosta then took questions. Creditors reportedly asked questions to “try and clarify what kind of adjustment the government planned for their debt.” Millstein allegedly did not give any clarification, saying he was “not in a position to talk about particular issuers’ debt.” He claimed that they would handle it on an “entity to entity” basis.
Acosta has been reported saying that “implementing a turnaround plan would require “sacrifice from all our stakeholders, including first and foremost the people of Puerto Rico” who endured a decade of stagnation; as well as government employees and local and multinational businesses. A plan also needs to include the federal government which can aid the economy and its financial creditors.”
When asked about whether Puerto Rico make it without any help from the federal government, Acosta stated the commonwealth was “not asking the government for a bail-out” but that it was seeking help with “policies that would remove barriers to economic stability.” She also stated she believed it was a bit premature to debate the amount of debt adjustment that will be required.
Reuters has added that Millstein “hoped Monday’s meeting would be the first in a series of constructive discussions between the commonwealth and investors to put Puerto Rico on a trajectory to growth.”
The article also mentioned that the meeting attracted a protest of about 30 people who yelled “No to the Krueger Plan.”
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.
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