National Public Finance Guarantee Corp. Commences Legal Action Seeking to Lift PROMESA Litigation Stay to Allow for the Appoi...
October 04 2018 - 9:04AM
Business Wire
Action Follows Successful Appeal of Title
III Court Ruling That Had Denied a Similar Motion Made in
2017
Receiver Necessitated by Chronic and Ongoing
Mismanagement and Undue Political Influence at PREPA
National Public Finance Guarantee Corporation (“National”), an
indirect subsidiary of MBIA Inc. (NYSE:MBI), today announced that
National, Assured Guaranty Corp., Assured Guaranty Municipal Corp.,
and Syncora Guarantee Inc. (“the Creditor Group”), have filed a
motion in the U.S. District Court for the District of Puerto Rico
to lift the PROMESA litigation stay that will allow the Creditor
Group to seek to enforce its right to compel the appointment of an
independent receiver for the Puerto Rico Electric Power Authority
(“PREPA”). The Creditor Group filed a similar motion in July 2017
that was denied by the District Court. The new motion follows a
successful appeal of that denial, as the First Circuit Court of
Appeals recently vacated the District Court’s decision and remanded
the case for further proceedings.
The appointment of a receiver, which would assume operational
control of PREPA to protect the interests of PREPA’s customers and
creditors, is necessitated by the utility’s well-documented history
of mismanagement and undue political interference in its
operations, the combined results of which were laid bare by
Hurricanes Irma and Maria.
“Successfully transforming PREPA is critical to the future of
Puerto Rico and its citizens,” said Bill Fallon, CEO of National
Public Finance Guarantee Corporation. “However, PREPA’s current
governance structure is incompatible with achieving that goal.
Political meddling in PREPA’s affairs has resulted in five
different chief executives in the past thirteen months, a
management team made up of political operatives rather than utility
experts, a board of directors that is beholden to political forces
and conflicts of interest throughout the organization. The end
result is an overstaffed yet underskilled utility lacking in
transparency. PREPA has failed to collect $3.4 billion in
receivables while it sits in bankruptcy, openly defies the orders
of its regulator, and subjects its customers to frequent outages
and long repair times. It is inconceivable that PREPA can transform
itself or attract the necessary private investment to do so under
the current circumstances. An independent receiver will insulate
PREPA from political influence, stabilize the company’s operations
and set it on a path for future success. The people of Puerto Rico
and all of PREPA’s stakeholders deserve nothing less.”
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. The
Creditor Group represents approximately 27 percent of the
outstanding bonds.
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: https://www.businesswire.com/news/home/20181004005406/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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