SAN JUAN, Puerto Rico — A federal oversight board responsible for managing Puerto Rico’s finances announced Tuesday that it is offering bondholders a $3 billion settlement in a renewed effort to restructure more than $10 billion in debt carried by the territory’s electric utility.
The proposal would provide bondholders — who have not yet reached a deal and are seeking roughly $8.5 billion in claims — with a combination of cash payments and newly issued bonds. The offer is $1.4 billion higher than what had previously been put on the table.
Puerto Rico’s Electric Power Authority has been working to resolve its debt situation for close to ten years. The crisis began in 2015 when the U.S. territory declared it could not repay a debt load exceeding $70 billion. In response, the U.S. Congress established the federal oversight board in 2016. The following year, Puerto Rico’s government filed for what became the largest municipal bankruptcy in American history.
In the years since, the board and the power company’s bondholders have repeatedly clashed over compensation, with several rounds of mediation failing to produce a resolution.
The board’s executive director, Robert F. Mujica Jr., said the time has come to move on. “Puerto Rico must be able to close this last chapter of its fiscal crisis and move forward,” he said.
Mujica also emphasized that resolving the utility’s debt “is essential to Puerto Rico’s recovery — to the reliable, affordable electricity and the new investment its residents and businesses deserve.”
One significant unknown remains: the board has not yet determined where the money to fund the proposed settlement would come from. That uncertainty has raised concerns among some observers, who fear that residents could end up footing the bill through higher electricity rates. Power costs in Puerto Rico are already among the steepest of any U.S. jurisdiction, even as the island continues to experience frequent and prolonged outages.
The board noted that prior agreements reached with certain creditors and bondholders in the power company’s case are still in effect. It also highlighted that, across Puerto Rico’s broader fiscal restructuring, it has completed 12 separate debt deals, eliminating more than $55 billion in debt payments over a 40-year period.
