The Puerto Rico Oversight Board announced concessions to win local government support for a debt deal but the president of the Puerto Rico Senate said he wants more.
“We are almost there,” Board President David Skeel said about getting approval on the Plan of Adjustment. “Let’s get to the finish line with the legislation necessary to restructure the debt.”
The board has been negotiating with local government leaders for several weeks on terms of restructured bonds and Contingent Value Instruments that are part of the Plan of Adjustment. The board hopes to have approval by Oct. 4.
On Monday, the board announced it would increase the threshold for pensions to be cut to $2,000 or more per month from its previous threshold of $1,500 or more a month. If Puerto Rico receives more federal Medicaid funding than projected by the fiscal plan, the board said it would approve lesser or no cuts to pensions for the fiscal year.
If the local government gets enough funding for Medicaid, the board would also be willing to divert money from the Puerto Rico Municipal Collection Center from the central government to the municipal governments, if the local legislature approves the Plan of Adjustment.
A bill to legalize the Board’s concessions was introduced by the Popular Democratic Party leadership of the Puerto Rico House of Representatives on Monday.
In addition, the House, Senate, and governor will soon “modify the applicable laws and —if necessary —the Constitution to prevent Puerto Rico from falling into bankruptcy again,” said House President Rafael Hernández Montañez.
In contrast to Hernández Montañez and his House PDP colleagues, Senate President José Luis Dalmau, also a PDP member, sent a letter Sunday asking for several additional conditions to be met in return for support of the Senate PDP delegation for restructured bonds legislation.
In his letter, Dalmau asked the Board for 10 concessions before his delegation would consider approving new bonds. The board largely agreed to two on Monday —the ones on the pension cuts and diverting funds for municipal governments.
In addition, Dalmau asked for:
- A $45 million per year increase in funding for the University of Puerto Rico over fiscal plan allocations for at least the next five years.
- Establishment of a trust fund for university scholarships.
- Elimination of planned cuts to the central government employee medical plans.
- Creation of a “special fund for social equality” to combat poverty, homelessness, high school drop outs, and other social ills.
- Providing health insurance for the 225,000 uninsured residents.
- Creation of a “Strategic Investment Fund for Economic Development” that will lead to five years of “investments to close basic skills gaps, small business capitalization programs; and the development of business growth programs through business capitalization.”
- “Establish a mechanism that allows the government of Puerto Rico to advance the terms of payments and debt cancellation.”
Dalmau told Skeel the Senate “will be ready to evaluate the content of the debt adjustment plan and the legislation required to finalize the debt renegotiation processes,” after the Board responds to the terms in the letter.
A spokesman said the Board was evaluating Dalmau’s letter.
In other news related to the Plan of Adjustment, on Friday afternoon Puerto Rico bondholder Peter Hein filed a motion in the bankruptcy case to extend the deadline for retail bondholders to vote to Oct. 18 from Oct. 4, since he received the packet on Sept. 23.
It was supposed to be sent no later than Aug. 30.
Further, he said, the packet did not contain a ballot and while he should have received two packets — one from each broker-dealer he had gotten his bonds through — he only received one, and pages in the voting instructions were missing.
Hein’s complaint follows motions by the Retirees Committee and Unsecured Creditors Committee to push back the deadline because many members had not received the packages.
Judge Laura Taylor Swain scheduled briefs through Thursday on Hein’s request, like she did with the two committee motions.