An emergency $300 million loan for Puerto Rico’s electric utility was approved on Monday by a federal judge, preventing more power outages on the island still recuperating from last year’s hurricanes.
Judge Laura Taylor Swain of U.S. District Court in New York signed off the loan, days after she rejected the funding for the utility, known as Prepa, The Wall Street Journal writes. Judge Swain had said at the time the cash-strapped power utility hadn’t looked hard enough for alternative funding before seeking court approval of a loan.
Prepa had asked for approval to tap $550 million of a proposed $1 billion financing package as it desperately needs funding to continue restoration work on Puerto Rico’s power grid and avert the threat of additional blackouts.
The Journal reports that Prepa’s chief financial adviser had told the court last week that the utility, run by the government, requires additional financing in place by later this week so that parts of the island would not go dark.
However, some Prepa bondholders disagreed with the government-backed loan, offering their own $534 million financing package which they said wouldn’t disadvantage other lenders.
When the island was hit by Hurricane Maria back in September, it was already struggling with a $73 billion debt load. The utility’s cash balances have diminished as hundreds of thousands of customers remain without service months after Maria devastated the island.
The federal board which oversees Puerto Rico’s finances in May placed the central government under bankruptcy. Two months later, it voted to move Prepa under court protection and Governor Ricardo Rosselló said he wants Prepa privatized to cut costs while attracting private partners to invest in upgrading its assets.
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