<span class="articleLocation”>Puerto Rico’s new government has hired
Rothschild & Co to help it develop a fiscal turnaround plan and
lead restructuring negotiations with creditors holding some $70
billion in debt, the government announced on Wednesday.
Rothschild will replace Millstein and Co, which had served
as financial adviser under the administration of ex-Governor
Alejandro Garcia Padilla.
Governor Ricky Rossello, who was sworn in on Jan. 2, had
sharply criticized Garcia Padilla’s financial policies, which
were shaped in large part by Millstein, during his campaign.
Rothschild’s hiring comes a few days after Rossello’s
administration tapped law firm Dentons to serve as legal
counsel, replacing Cleary Gottlieb, which had played that role
for Garcia Padilla.
In a statement on Wednesday, Puerto Rico’s Fiscal Agency and
Financial Advisory Authority, the U.S. territory’s primary
fiscal agent, said the Rothschild team would be led by Todd
Snyder, the firm’s restructuring chief.
“We selected Rothschild & Co based upon its commitment to
Puerto Rico and its extensive track record advising in many of
the most complex transactions in recent years,” Gerardo Portela,
FAFAA’s executive director, said in the statement.
Puerto Rico faces months of complicated debt restructuring
talks with myriad creditor groups. The U.S. territory owes $18
billion in general obligation debt, backed by a constitutional
promise; $15 billion in so-called COFINA debt backed by sales
tax proceeds; and billions more in debt at public agencies like
power authority PREPA and water utility PRASA.
Nearly half the island’s 3.5 million residents live in
poverty. Its unemployment rate is more than twice the U.S.
average, and its population continues to fall as locals flock to
the U.S. mainland.
Under a federal rescue law known as PROMESA, passed last
year, the island must submit a fiscal turnaround plan to a
federal board appointed to manage the island’s finances. The
board will also likely play a role in facilitating debt
restructuring talks between the island and creditors.
Garcia Padilla had pushed for sharp reductions in debt
payments to creditors, and ordered several defaults during his
term. Rossello, who favors U.S. statehood for the island,
believes it should try to limit such cuts while imposing
belt-tightening measures like consolidating public agencies.
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