NEW YORK--(BUSINESS WIRE)--The members of an ad hoc group of bondholders who hold approximately $935 million of bonds (the “Ad Hoc Group”) issued by the Government Development Bank for Puerto Rico (“GDB”) confirmed today that they have reached agreement with GDB on indicative terms of a proposed restructuring of their holdings, subject to the negotiation of remaining terms and conditions. Pending definitive documentation of the agreement, the Ad Hoc Group expects to enter into a 30-day forbearance with respect to any defaults by GDB in connection with the principal payments on its bonds due on May 1, 2016.
The indicative terms contemplate a two-step restructuring of all outstanding bonds of GDB, with an initial exchange in which existing GDB bonds held by members of the Ad Hoc Group would be exchanged for GDB notes with a face amount of 56.25% of the face amount of their original GDB bonds, which new notes will be secured by a first priority lien on municipal loans serviced by sales and use taxes and real property taxes. The indicative terms also contemplate that if a qualifying global exchange is consummated after the initial exchange, the Ad Hoc Group would exchange the GDB notes received in the initial exchange for consideration with an agreed value of 47% of the face amount of their original GDB bonds.
The financial concessions contemplated by the proposed restructuring are intended to help stabilize the operations of GDB and to support the Commonwealth's efforts to restructure its other financial obligations.
In connection with the agreement in principle, certain members of the Ad Hoc Group and GDB agreed to extend the time to amend the complaint that was filed by those members in the federal District Court for the Commonwealth of Puerto Rico relating to constitutional and other disputes over the treatment of creditors of GDB to May 31, 2016.
The members of the Ad Hoc Group are funds managed or advised by Avenue Capital Management II, L.P., Brigade Capital Management, LP, Claren Road Asset Management, LLC, Fir Tree Partners, Fore Research & Management, LP and Solus Alternative Asset Management LP. Davis Polk & Wardwell LLP and Vicente & Cuebas are acting as counsel to the Ad Hoc Group. Ducera Partners is acting as the Ad Hoc Group's financial advisor.