NEW YORK (Reuters) - Puerto Rico has selected AlixPartners’ Lisa Donahue to lead a restructuring of the U.S. territory’s troubled power authority PREPA, two sources briefed on the matter said on Thursday.
PREPA, whose debt troubles are a symbol of the wider stress threatening the U.S. territory, must select a restructuring chief by Monday under a forbearance agreement with lenders and other creditors as it undertakes to restructure more than $9 billion in debt.
Reuters on Tuesday reported Donahue was a frontrunner for the position, with other candidates having included FTI Consulting’s Scott Davido and Zolfo Cooper’s Joff Mitchell.
The New York Times earlier on Thursday reported Donahue was selected.
The sources declined to be named as the matter is not public. AlixPartners declined to comment.
The chief restructuring officer will negotiate with creditors on PREPA’s behalf and lead efforts to develop a business plan by March.
While FTI is already well-versed in the situation, having been hired by Puerto Rico’s Government Development Bank in April to advise on restructuring options, Donahue’s experience in the energy sector may have worked in her favor.
Donahue served as restructuring officer to oil and gas company SemGroup LP and was chief financial officer at power company Calpine Corp during its two-year, $22 billion bankruptcy.
She was also chief financial officer at Atlantic Power Corp when it acquired Capital Power Income LP in 2011, according to AlixPartners’ website.
Restructuring PREPA could well include overhauling its business model, which is widely seen by analysts as over-reliant on expensive oil rather than cheaper natural gas.
Puerto Rico’s highway and water authorities are also struggling with debt. A contentious new law allows PREPA and other authorities to restructure that debt, but the law is facing a legal challenge from creditor groups who say it is unconstitutional.
The Puerto Rican government is trying to turn the commonwealth around following a decade during which an index of the island’s economic activity has fallen by 18 percent and the number of employed people has fallen by 11 percent.
Reporting by Megan Davies and Nick Brown; Editing by Diane Craft