Dive Brief:

• The Puerto Rico Electric Power Authority (PREPA) has reached a deal with creditors to amend and reinstate an agreement to restructure almost $9 billion in debt after a previous agreement expired last Friday, Bloomberg reports. in an arrangement that includes the island protectorate's lawmakers approving a new surcharge,
• The new deal gives Puerto Rico lawmakers until Feb. 16 to pass legislation enabling PREPA to enact the provisions of its Restructuring Support Agreement, which would cut its debt and create a new customer surcharge. Banks that finance the utility's fuel purchases agreed earlier this week to continue funding the utility after lawmakers missed a previous Jan. 22 deadline to pass the enabling legislation.   
• The amended deal calls for a bond sale through which creditors will lend PREPA $111 million, buying the other half of the bonds when island regulators approve a surcharge on customers.

Dive Insight:

Like the commonwealth at large, PREPA is struggling with its finances and has about $9 billion in debt that it aims to restructure. A deal which had been in place expired last week when the island's legislature failed to pass legislation enabling the agreement. 

“The agreements reflect the mutual understanding among PREPA and its key creditors about the importance of PREPA's financial restructuring and comprehensive transformation,” Lisa Donahue, the utility’s chief restructuring officer, told Bloomberg in a statement. “We have a long way to go, and there remain many uncertainties, but if implemented, Prepa’s transformation will have a positive, lasting impact on its finances, operations and culture.”

If finalized by lawmakers, the RSA deal is expected to reduce the utility's obligations by $600 million and postpone another $700 million of its debt for five years. It also includes new standards for operations, a proposed new rate structure, and an investment plan. 

The commonwealth is seeking help from the mainland as well. The Obama administration is pushing Congress to alter the Bankruptcy Amendments of 1983-84 to allow restructuring under federal Chapter 9 rules, currently prohibited for states and territories like Puerto Rico. The U.S. Supreme Court will hear a case this spring that may bypass the need for Congressional action by legalizing bankruptcy. 

But none of those actions is likely to come soon enough for PREPA, which is low on cash to finance its fuel purchases and narrowly avoided default earlier this month. If lawmakers do not pass the enabling legislation by the Feb. 16 deadline, Bloomberg reports that PREPA could default by July.