Puerto Rico HTA plan confirmation hearing set for mid-August

Puerto Rico bankruptcy Judge Laura Taylor Swain this week approved key Puerto Rico Highways and Transportation Authority bankruptcy documents and dates, moving the plan closer to confirmation with a final hearing set for mid-August.

Swain filed her order Wednesday in the U.S. District Court for Puerto Rico, approving the Oversight Board-proposed disclosure statement, ballots, and election notices on the proposed plan of adjustment. Swain set the confirmation hearing for Aug. 17 to 18.

In mid-May, the Oversight Board told Swain the plan already was supported by enough of the creditors to assure passage.

Swain set the date for votes to be received to be July 27 and objections to the confirmation are due July 27 with replies to the objections by Aug. 7. Objections to the board’s findings of fact and conclusions of law are due by Aug. 15.

While the terms of the HTA bond restructuring were largely set in the central government’s plan of adjustment approved in January, HTA bondholders did not get cash, bonds, or contingent value instruments when that plan was executed in March. Further conditions had to be met, including court approval.

According to the terms of the proposed HTA plan of adjustment, holders of $4.3 billion of HTA bonds would receive $1.2 billion of new bonds with 5% coupons and $389 million of cash. The generosity of the deal depends on what type of HTA bond is held.

The plan includes a $314 million loan by Puerto Rico's central government to HTA to facilitate the cash payments required by the plan, repayable over 30 years at 2.5% interest.

About $1.2 billion of the original par value is uninsured and the rest is insured by Assured Guaranty (AGO), Financial Guarantee Insurance Corp., and Ambac Assurance.