National Criticizes Puerto Rico Oversight Board For Its Improper & Unfortunate Decision to Authorize Title III Bankruptcy Fil...
June 30 2017 - 4:30PM
Business Wire
National Believes Oversight Board has Violated
PROMESA and Caused Dire Consequences For Commonwealth
National Public Finance Guarantee Corporation (“National”), an
indirect subsidiary of MBIA Inc. (NYSE:MBI), said today it believes
the Financial Oversight and Management Board for Puerto Rico (the
“Oversight Board”) has violated the Puerto Rico Oversight,
Management, and Economic Stability Act (“PROMESA”) by authorizing a
Title III bankruptcy filing by the Puerto Rico Electric Power
Authority (“PREPA”).
“We believe the Oversight Board’s decision to authorize a Title
III filing for PREPA is ill-advised, improper, and could well have
dire consequences for Puerto Rico,” said Bill Fallon, CEO of
National Public Finance Guarantee Corporation. “The Oversight Board
has violated PROMESA and is now pursuing an agenda that
unnecessarily and inappropriately throws away PREPA’s carefully
constructed Restructuring Support Agreement. That Agreement was
reached after three years of negotiations, has broad creditor
support and has been approved by all required parties, including
two governors and the Puerto Rico legislature. Creditors, along
with PREPA, completed an immense amount of underlying work to
understand the utility’s business and proposed significant
concessions that would lead to a successful solution for PREPA’s
debt problems. A Title III bankruptcy filing could cause lengthy
litigation in which creditors would assert all of their rights to
achieve payment in full and could result in rate increases that
would leave PREPA years away from attracting the private investment
necessary to modernize. The RSA was the essential first step to
achieve viability for PREPA.”
As previously reported, National and other supporting creditors
offered to take action that would have provided additional time for
discussions to avoid a Title III bankruptcy filing by PREPA, but
those actions were rebuffed by Puerto Rico Governor Ricardo
Rosselló, PREPA and the Puerto Rico Fiscal Agency & Financial
Advisory Authority.
Mr. Fallon continued, “The Oversight Board chairman asserted in
today’s public hearing that this week, the Oversight Board offered
PREPA’s creditors, including insurers and banks, a similar economic
deal as contained in the RSA, but with additional provisions for
Title III, but that is simply not true. The proposal had
significantly different terms for the monolines, and we believe it
was designed to fail, given the timing of the proposal being made
immediately before the payment date. We also strongly take issue
with the Oversight Board’s determination that the RSA is not a
pre-existing agreement under PROMESA. This determination fails to
consider the statute and the facts in order to justify the Board’s
clear failure to comply with its obligations under PROMESA.”
Forward-Looking Statements
This release includes statements that are not historical or
current facts and are “forward-looking statements” made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The words “believe,” “anticipate,” “project,”
“plan,” “expect,” “estimate,” “intend,” “will likely result,”
“looking forward” or “will continue,” and similar expressions
identify forward-looking statements. These statements are subject
to certain risks and uncertainties that could cause actual results
to differ materially from historical earnings and those presently
anticipated or projected, including, among other factors, the
possibility that MBIA Inc. or National will experience increased
credit losses or impairments on public finance obligations issued
by state, local and territorial governments and finance authorities
that are experiencing unprecedented fiscal stress; the possibility
that loss reserve estimates are not adequate to cover potential
claims; MBIA Inc.’s or National’s ability to fully implement their
strategic plan; and changes in general economic and competitive
conditions. These and other factors that could affect financial
performance or could cause actual results to differ materially from
estimates contained in or underlying MBIA Inc.’s or National’s
forward-looking statements are discussed under the “Risk Factors”
section in MBIA Inc.’s most recent Annual Report on Form 10-K,
which may be updated or amended in MBIA Inc.’s subsequent filings
with the Securities and Exchange Commission. MBIA Inc. and National
caution readers not to place undue reliance on any such
forward-looking statements, which speak only to their respective
dates. National and MBIA Inc. undertake no obligation to publicly
correct or update any forward-looking statement if it later becomes
aware that such result is not likely to be achieved.
National Public Finance Guarantee Corporation, headquartered in
Purchase, New York is the world’s largest U.S. public finance-only
financial guarantee insurance company, with offices in New York and
San Francisco. Please visit National’s website
at www.nationalpfg.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20170630005751/en/
National Public Finance Guarantee CorporationMedia:Greg
Diamond, 914-765-3190orFixed-Income Investor Relations:Kevin Brown,
914-765-3385orMBIA Inc.Investor and Media Relations:Greg
Diamond, 914-765-3190
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