Ambac Assurance Corp. and various other parties executed a plan support agreement for the restructuring of all senior and junior bond of the Puerto Rico Sales Tax Financing Corp., better known by its Spanish acronym COFINA.
The Financial Oversight and Management Board for Puerto Rico, COFINA, the Puerto Rico Fiscal Agency and Financial Advisory Authority, Bonistas Del Patio Inc., other bond insurers including Assured Guaranty Municipal Corp., and certain holders of senior and junior COFINA bond claims are also parties to the agreement.
Under the agreement, creditors will support the filing of a plan of adjustment that would see senior bondholders receive consideration comprising new COFINA bonds and cash, with a face amount equal to about 93%, plus accrual as of August, of their claim amounts as of May 5, 2017, when Puerto Rico sought bankruptcy protection for COFINA debt. This distribution does not take into account Ambac's insurance policy for its insured bonds.
The plan also provides for a distribution of new COFINA bonds and cash with a face amount of approximately 56%, plus accrual as of August, of junior COFINA bondholders' petition date claim amounts.
The plan of adjustment's terms and related documentation remain subject to negotiation and court approval. The plan, once confirmed by the court overseeing COFINA's Title III proceeding, will resolve all COFINA-related litigation and validate the COFINA structure.
The agreement will be filed in federal court by Oct. 15, Reuters noted Aug. 30. Natalie Jaresko, executive director of the island's Financial Oversight and Management Board, said it should enable a consensual restructuring of COFINA debt by year-end.
The agreement would be the first debt adjustment plan for Puerto Rico to be put forward for court approval.
Ambac Assurance is a unit of Ambac Financial Group Inc. Assured Guaranty Municipal Corp. is a unit of Assured Guaranty Ltd.