National Public Finance Guarantee Corp. Takes Legal Action to Lift the PROMESA Stay to Seek the Appointment of a Receiver & C...
July 18 2017 - 2:42PM
Business Wire
Due to the Rejection of the RSA, Debt
Savings Are Also Lost
PREPA Payment Default Could Have Been
Avoided
National Public Finance Guarantee Corporation (“National”), an
indirect subsidiary of MBIA Inc. (NYSE:MBI), today announced that
National, along with the Ad Hoc Group of PREPA bondholders, Assured
Guaranty Corp., Assured Guaranty Municipal Corp. and Syncora
Guarantee Inc. (“the Creditor Group”), has filed a motion in the
U.S. District Court for the District of Puerto Rico to lift the
PROMESA stay to seek to enforce its right to compel the appointment
of an independent receiver in order to pursue increased rates and
to oversee certain operations of the Puerto Rico Electric Power
Authority (“PREPA”).
“As PREPA’s single largest creditor, we worked tirelessly for
several years with all stakeholders on a comprehensive
restructuring that the Oversight Board forced off the table in
violation of PROMESA. As a result of the default precipitated by
the Oversight Board’s unlawful action, we now have little option
but to enforce our legal and contractual rights, and to ensure
PREPA sets rates and charges that are sufficient to meet its
financial obligations,” said Bill Fallon, CEO of National Public
Finance Guarantee Corporation. “We cannot allow PREPA to continue
to ignore its obligations under Puerto Rico law and the terms of
our Trust Agreement. Given PREPA’s lengthy history of mismanagement
and cronyism and the inherent conflicts of interest ignored by the
Governor and the Oversight Board, an independent receiver will
provide much-needed protection for PREPA, the citizens of Puerto
Rico and its creditors. It is imperative that the rule of law is
recognized and that the political manipulation of PREPA is halted.
We continue to support the utility’s long-term viability and access
to the capital markets.”
Puerto Rico law and the PREPA Trust Agreement require PREPA to
set electricity rates at amounts sufficient to enable PREPA to pay
its debts, which include approximately $8.3 billion of outstanding
bond debt. Accordingly, today’s motion seeks to lift the stay under
the Puerto Rico Oversight, Management, and Economic Stability Act
(“PROMESA”) so that the Creditor Group can enforce their rights
under Puerto Rico law and the Trust Agreement following the payment
default by PREPA earlier this month.
Bondholders holding at least 25 percent in principal amount of
the PREPA bonds outstanding have a statutory right to the
appointment of a receiver following an event of default. National,
along with rest of the Creditor Group, represent almost 70 percent
of the outstanding bonds.
In addition, National has filed an amended complaint in its
lawsuit against the Oversight Board in the U.S. District Court for
the District of Puerto Rico, asking the court to award National
damages for the Oversight Board’s unlawful rejection of the
RSA.
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/20170718006294/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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