By Aaron Kuriloff
The Puerto Rico Electric Power Authority reached agreements
Thursday with banks allowing it to defer payments on lines of
credit to Aug. 14, according to a statement from the authority.
The extension is the second this month for the authority, giving
it more breathing room to forestall a possible restructuring of
about $9 billion in total debt. Earlier this month it reached deals
with Citigroup Inc. unit Citibank and a syndicate led by Bank of
Nova Scotia's Scotiabank de Puerto Rico to delay some payments on
$671 million it owed the banks between July and mid-August.
The utility, known as Prepa, is at the forefront of Puerto
Rico's long-running financial difficulties. Prepa is scrambling to
find cash to fund operations and make payments to lenders, even as
the commonwealth broadly struggles with steep unemployment and a
weak economy.
Puerto Rico has about $73 billion in total obligations and its
debt is widely held by municipal mutual funds and individuals,
leading some analysts to worry that the power authority's troubles
could escalate into losses for investors nationwide.
Puerto Rico lawmakers in June approved legislation allowing some
public agencies, including the island's power, water and
transportation authorities, to overhaul almost $20 billion in debt.
The law doesn't apply to Puerto Rico's general obligation or
sales-tax debt.
Write to Aaron Kuriloff at Aaron.Kuriloff@wsj.com
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