G25's PR Debt Re-Balancing Proposal

8/15/2019 G25's PR Debt Re-Balancing Proposal

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Coming out of the Standstill:

A Comprehensive Proposal toRe-Balance Puerto Rico’s Public Debt

During the past 11 months we have represented and advised a group of mchartered credit unions (“Cooperativas de Ahorro y Crédito”) publicly known as the Gcredit unions represent 56% of the 1.2 million members and depositors and have a presenPuerto Rico’s 78 municipalities. Additional credit unions and Fondo de Inversión y

Cooperativo (“Fidecoop”) have joined the Group, which now surpasses the original 25 in The G25 has made concrete proposals regarding the restructuring of public debt and has

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1. A voluntary restructuring of public debt for which the Commonwea

advisors seek significant principal “haircuts” (ranging from approximately60%);

2. Access to Chapter 9 bankruptcy, presumably to impose principal haircuts;1

3. Adoption of a federally legislated Fiscal Control Board with debt repowers and broad authority over all public functions.

The last months have shown that each of these options carries inherent diffiimpede their implementation, which are as follows:

a. With regards to the restructuring proposals, the principal haircuts propoCommonwealth are unreasonable and have not been adequately supfinancial information. Haircuts of this magnitude have made a voluntaryimpossible. Furthermore, they entail a $7.5 billion loss of capital to ourand an additional hit to Puerto Rico’s market credibility. These damages a

to our economic recovery and delay Puerto Rico’s efforts to regain accmarkets.


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Our Comprehensive Proposal

In contrast to this adverse picture, we propose a new approach that acknowledgdistinct dimensions of the crisis: the immediate liquidity crunch and the substantive challenges. We propose that the immediate dimension be addressed through a restruoutstanding debt based upon the following principles:

• Substantial preservation of principal;

•

Respect for the diverse priorities and credit ranks of the different issuers;

• “Evening out” maturity dates;

• Sustained payment of interests;

• Adoption of credible and enforceable control measures that spur market confiden

•

Integration of reasonable mechanism for:• the financing of intra-year liquidity needs, and


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!

Debt owed by COFINA would be reduced in approximately $1,475MM.

! Total “Debt Relief” to the Commonwealth: $3.419MM

!

This Debt Relief is done in a balanced manner protecting traditional inavoiding excessive cuts in favor of the government and avoiding excessivesecondary market investors.

! The proposal will restore the Commonwealth’s ability to pay its debts, which w

market valuation of the Re-Balanced Bonds.

! The proposal will address the working capital financing needs of the governme

allow for the financing of infrastructure and capital investments needed to spur gro

! Furthermore, the proposal seeks to restore Puerto Rico's credibility by:

! respecting the constitutional guarantee of GOs,

! upholding the representations made by the Commonwealth regarding the p


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As stated before, solving the immediate dimension does not liberate us from tunderlying substantive challenges we still confront. Nevertheless, a stable fiscal outlook wan improved context to address these economic and political challenges. For sure, we shto do so promptly. The sooner we come out of the current standstill, the better positionbe to tackle the long term challenges we have before us.

We openly put forth the terms of this proposed global restructuring with a view stakeholders weigh in and participate in a broad discussion geared towards reaching

solutions. This proposal also fulfills the Commonwealth’s request for global proposals, to segmented or individual solutions. We certainly hope that, working jointly and in goomay all carry forward this conceptual framework and convert it into a workable solutionus out of the current standstill.

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June 7, 2

Rebalance Proposal

A Debt Restructure Proposal by Puerto Rico’s Credit Unions to the Government of Puerto Rico

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G25's PR Debt Re-Balancing Proposal

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