Puerto Rico governor seeks more time on fiscal plan, lawsuit freeze

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By Nick Brown | NEW YORK

NEW YORK Jan 5 Puerto Rico’s new governor is
seeking more time to present a fiscal turnaround plan for the
struggling U.S. territory, saying the Jan. 31 deadline set by
the commonwealth’s federal oversight board is too tight.

In a letter to the board dated Jan. 4, a representative for
Governor Ricardo Rossello, who was sworn in on Monday, sought at
least a 45-day extension, which would push the deadline to
present a plan to March 17.

Under the territory’s federal rescue law known as PROMESA,
passed last year, Puerto Rico’s governor has to present a
blueprint for the island’s financial future that must be
approved by the federally-appointed board tasked with managing
its dire fiscal position.

The board last year set a Jan. 31 deadline for the plan, but
Elias Sanchez, Rossello’s liaison to the board, said the
deadline would give the administration too little time to assess
Puerto Rico’s finances or attempt restructuring talks.

The governor also sought a 75-day extension of PROMESA’s
so-called automatic stay provision, which prevents creditors
from suing Puerto Rico over missed debt payments. With the stay
set to expire on Feb. 15, Rossello asked the board to extend it
until May 1.

That would give the island more time to try to negotiate
restructuring talks with holders of $70 billion in debt issued
by Puerto Rico and its public agencies.

If the deadline expired in February, it could force Puerto
Rico or the board to preemptively push some public agencies into
a legal process under PROMESA akin to U.S. bankruptcy
protection, known as Title III, the letter said.

“We are very concerned that a rushed process to certify a
fiscal plan by January 31, 2017, and a view that the movement of
the PROMESA stay on February 15, 2017, is an intractable
deadline, could prematurely precipitate Title III filings for
some or all” of the government’s public debt issuers, the letter
stated.

Puerto Rico owes $18 billion in general obligation debt,
backed only by a constitutional promise; $15 billion in
so-called COFINA debt backed by sales tax proceeds, and billions
more in debt at myriad public entities, such as the PREPA power
authority and PRASA water utility.

The island has an unemployment rate more than twice the U.S.
average, its 3.5 million population is shrinking as locals flock
to the mainland and nearly half of those who remain live in
poverty.



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