NEW YORK (Reuters) - Puerto Rico rejected on Thursday a $1 billion loan offer from creditors of the island’s bankrupt power utility, calling the proposal “not viable” and saying it would hamper the utility’s ability to recover.
The Puerto Rico Electric Power Authority’s bondholder group on Wednesday offered the utility a new $1 billion loan and a discount on a portion of existing debt to help recovery efforts after Hurricane Maria devastated the island last week.
Maria knocked out power to the U.S. territory’s 3.4 million residents and left PREPA, which declared bankruptcy in July, scrambling to complete damage assessments.
Restoring electricity supply is a high priority as Puerto Rico struggles to recover from the hurricane.
Puerto Rico’s Fiscal Agency and Financial Advisory Authority said in a statement that the bondholder group’s offer was an effort to improve the value of the debt rather than help with rebuilding efforts.
“Such offers only distract from the government’s stated focus and create the unfortunate appearance that such offers are being made for the purpose of favorably impacting the trading price of existing debt,” the statement said.
The statement asked that creditor groups “refrain from making unsolicited financing offers at the expense of the people of Puerto Rico.”
In a statement released Thursday, Stephen Spencer of Houlihan Lokey, the PREPA bondholder group’s financial advisor, said the group was disappointed by Puerto Rico’s rejection of the offer “without any discussion or counter-proposal.”
“We sincerely believed our loan would have helped PREPA finance its recovery and rebuilding efforts as quickly as possible in the wake of two terrible hurricanes,” he said.
Reporting by Stephanie Kelly; Editing by Bill Trott and Andrew Hay