October 14, 2017 / 12:50 AM / 2 years ago

Assured Guaranty withdraws PREPA lawsuit in Hurricane Maria aftermath

Oct 13 (Reuters) - Bond insurer Assured Guaranty Ltd said on Friday it voluntarily withdrew its lawsuit against Puerto Rico Electric Power Authority (PREPA) over the failure to apply pledged revenue to the payment of bonds because of the utility’s need to focus on restoring the power grid damaged by Hurricane Maria.

The bond insurer said it is not appropriate to be litigating these issues while continued emergency efforts are needed to restore electricity on the U.S. territory.

The lawsuit, filed on Aug. 7, claimed that PREPA’s failure to apply the revenues to the payment of the revenue bonds was “inconsistent” with the Special Revenues Provisions of the bankruptcy code and a violation of the U.S. Constitution.

Assured Guaranty said if PREPA fails to resume timely payment of its bonds, under terms of the Special Revenues Provision, that after restoration of the electric system it may refile the lawsuit.

In April, PREPA signed a deal to restructure $8.9 billion in debt through new bonds with longer maturities. Assured Guaranty funded a surety to protect against defaults. (Reporting by Shubham Kalia in Bengaluru; Editing by Leslie Adler)

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