Knighthead's Tom Wagner on Puerto Rico Bond Offer

The video discusses the financial challenges faced by Puerto Rico's Electric Power Authority (PREPA) following a hurricane that left the island without power. A $1 billion loan proposal aims to aid PREPA's recovery, offering debt relief and new capital. The proposal includes no interest or principal payments during restructuring and aligns with FEMA guidelines to unlock additional funds. Despite high risks, the proposal seeks to transform PREPA's utility system. The video also covers the debate on privatizing PREPA and the importance of efficient management.

What was the immediate need for Puerto Rico following the hurricane?

• Tourism development

• Restoration of the electric grid

• Construction of new roads

• Expansion of the airport

What is the interest rate proposed for the $1 billion loan to PREPA?

• L + 2%

• L + 5%

• L + 3%

• L + 4.5%

What is the purpose of the $1 billion loan proposed by bondholders?

• To fund tourism projects

• To restore and upgrade the electric grid

• To build new schools

• To improve public transportation

How does the current proposal differ from previous ones?

• It does not require resolving existing debt issues

• It is a market transaction

• It is not fully committed

• It requires immediate debt resolution

What financing structure is used for the current proposal?

• Debtor-in-possession financing

• Equity financing

• Government grant

• Crowdfunding

What is a significant challenge faced by PREPA in the aftermath of the hurricane?

• Lack of skilled workers

• Insufficient diesel fuel for generators

• Overabundance of electricity

• Excessive government funding

What is a key risk factor mentioned regarding the loan to PREPA?

• Lack of previous capital offers

• High interest rates

• Stable financial history

• Low demand for electricity

What is the potential benefit of the proposed financing for PREPA?

• Higher electricity prices

• Increased tourism

• Reduced government control

• Improved utility efficiency

What is the main argument for privatizing PREPA?

• To eliminate government oversight

• To reduce electricity prices

• To ensure efficient management

• To increase public sector jobs

What is the stance of bondholders on the privatization of PREPA?

• They demand it

• They oppose it

• They support it

• They are neutral