Puerto Rico Power Authority and Bank Lenders Agree to Postpone Loan Payments to August 14

By Aaron Kuriloff 

The Puerto Rico Electric Power Authority reached agreements Thursday with banks allowing it to defer payments on lines of credit to Aug. 14, according to a statement from the authority.

The extension is the second this month for the authority, giving it more breathing room to forestall a possible restructuring of about $9 billion in total debt. Earlier this month it reached deals with Citigroup Inc. unit Citibank and a syndicate led by Bank of Nova Scotia's Scotiabank de Puerto Rico to delay some payments on $671 million it owed the banks between July and mid-August.

The utility, known as Prepa, is at the forefront of Puerto Rico's long-running financial difficulties. Prepa is scrambling to find cash to fund operations and make payments to lenders, even as the commonwealth broadly struggles with steep unemployment and a weak economy.

Puerto Rico has about $73 billion in total obligations and its debt is widely held by municipal mutual funds and individuals, leading some analysts to worry that the power authority's troubles could escalate into losses for investors nationwide.

Puerto Rico lawmakers in June approved legislation allowing some public agencies, including the island's power, water and transportation authorities, to overhaul almost $20 billion in debt. The law doesn't apply to Puerto Rico's general obligation or sales-tax debt.

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