EXHIBIT J

(Restructuring Proposal)

Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 1 of 9
PO Box 42001 • San Juan, PR 00940-2001 • Telephone (787) 722-2525

Municipal Secondary Market Disclosure Information Cover Sheet 

Municipal Securities Rulemaking Board (MSRB)

Electronic Municipal Market Access System (EMMA) 

Additional / Voluntary Event-Based Disclosure

THIS FILING RELATES TO ALL OR SEVERAL SECURITIES ISSUED BY THE ISSUER, OR ALL OR SEVERAL 

SECURITIES OF A SPECIFIC CREDITOR:

Issuer’s Name: THE COMMONWEALTH OF PUERTO RICO

Other Obligated Person’s Name (if any): 

Six-digit CUSIP number(s): 745145 and 74514L

TYPE OF INFORMATION PROVIDED: 

A. Amendment to Continuing Disclosure Undertaking

B. Change in Obligated Person

C. Notice to Investor Pursuant to Bond Documents

D. Communication from the Internal Revenue Service

E. Bid for Auction Rate and Other Securities

F. Capital or Other Financing Plan 

G. Litigation / Enforcement Action

H. Change of Tender Agent. Remarketing Agent or Other On-going Party

I. Derivative or Other Similar Transaction

J. Other Event-Based Disclosures: Government of Puerto Rico proposal under Title VI of PROMESA

I represent that I am authorized by the issuer, obligor or its agent to distribute this information publicly.

/s/ Sebastián M. Torres Rodríguez

Sebastián M. Torres Rodríguez 

Puerto Rico Fiscal Agency and Financial Advisory Authority, 

 as Fiscal Agent for the Commonwealth

Dated: April 28, 2017

Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 2 of 9
April 24, 2017 Strictly confidential

611287

CONFIDENTIAL - SUBJECT TO FRE 408

GO / COFINA

Project Estado

CONFIDENTIAL

ADVISORS EYES ONLY SUBJECT TO NDA

PREPARED AT REQUEST OF COUNSEL FOR SETTLEMENT PURPOSES - FRE 408

CONFIDENTIAL WORKING DRAFT – ADVISORS EYES ONLY SUBJECT TO NDA

SUBJECT TO MATERIAL CHANGE

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Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 3 of 9
611287

CONFIDENTIAL - SUBJECT TO FRE 408

Proposal

The Cash Flow Available for Debt Service in the certified Fiscal Plan shall form the basis of a comprehensive settlement

To attract maximum consensus, Puerto Rico will issue three types of settlement currency:

 Up to $16.75 billion

 Constitution priority debt 

 Tax-exempt1

 Capable of attracting a rating

 Turbo structure and designed to be tradeable

– Senior Tranche: Up to $8.0 billion

– Junior Tranche: Up to $2.0 billion 

 Senior Tranche possibly tax-exempt; Junior Tranche likely taxable 

 Payment only upon performance in excess of certified Fiscal Plan

 Intended to capture favorable variances from Fiscal Plan, including from outperformance of macroeconomic 

assumptions and results of fiscal measures

Senior Bonds

Cash Flow Bonds

Short Term Notes  Consideration from the sale of assets in COFINA reserve accounts to Puerto Rico

GO Bonds and GO Guaranteed claims will receive pro rata distribution of [$9.8bn] of Senior Bonds

COFINA creditors will receive a choice of treatment:

 If they consent to the plan of adjustment, COFINA creditors will receive pro rata share of [$6.9bn] of Senior Bonds

– COFINA Senior and COFINA Junior claims to be treated pari passu

 If they reject the plan of adjustment, COFINA Senior creditors will receive [$450m] of short-term notes and COFINA Junior 

creditors will receive no distribution due to contractual subordination

Senior Cash Flow Bonds distributed pro rata to GO Bonds, GO Guaranteed claims and COFINA claims (if accepting the 

plan) on account of any allowed deficiency claims

Junior Cash Flow Bonds distributed pro rata to Claw Back Entity creditors

Convenience class established to provide 100% recovery to creditors with total claims below a minimum threshold TBD

1

2

3

4

5

6

Note

1 A portion of Senior Bonds may be taxable. Final allocations TBD 1

7

CONFIDENTIAL WORKING DRAFT – ADVISORS EYES ONLY SUBJECT TO NDA

SUBJECT TO MATERIAL CHANGE

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Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 4 of 9
611287

CONFIDENTIAL - SUBJECT TO FRE 408

Illustrative creditor treatment

Illustrative creditor treatment ($m)

COFINA claims offered 

choice of:

• Short-term notes for 

amount in the COFINA 

Pledge Account, or

• Pro rata Senior Bond 

& Senior Cash Flow 

Bond subject to 25% 

discount

2

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SUBJECT TO MATERIAL CHANGE

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Proposed Treatment

Cash Flow Bond

Illustr. Senior Senior Junior

Claim Bond Tranche Tranche

GO + COFINA

GO Bonds $13,243 $6,935 $3,312 --

GO Guarantee 5,559 2,911 1,390 --

Subtotal 18,802 9,846 4,702 --

COFINA - Sr 7,666 3,011 1,438 --

COFINA - Jr 9,914 3,894 1,860 --

Total COFINA 17,580 6,904 3,298 --

Convenience Class [____] [____] -- --

Total GO + COFINA 36,382 16,750 8,000 --

Claw Back Entities

HTA 4,124 -- -- 1,223

PRCCDA 386 -- -- 115

PRIFA 2,207 -- -- 654

MBA 28 -- -- 8

Total 6,746 -- -- 2,000

Overall Total $43,128 $16,750 $8,000 $2,000

Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 5 of 9
611287

CONFIDENTIAL - SUBJECT TO FRE 408

Illustrative flow of funds

Cash Flow Available for Debt Service

Senior Bond

$16.75 bn

Future GO Debt 

Issuances

Cash Flow Available after GO Debt

New Senior CF Bond

$8.0 bn

New Junior CF Bond

$2.0 bn

First $250m Amounts in 

excess of $250m 90%

40%

Senior Debt Service

Cash Flow Bonds 

Debt Service

Government of 

Puerto Rico

50% 50%

10%

60%

Cash Flow Available for Cash Flow Bonds

3

CONFIDENTIAL WORKING DRAFT – ADVISORS EYES ONLY SUBJECT TO NDA

SUBJECT TO MATERIAL CHANGE

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Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 6 of 9
611287

CONFIDENTIAL - SUBJECT TO FRE 408

Term Sheet: New Senior Bond

 Senior Bond with constitutional priority

– Classified as Tax Exempt debt

Security

Amount  $16.75 billion initial principal amount

Coupon Rate  Step coupon for 5 years reaching 4.50% at year 5

– Payable semi-annually on January 1

st and July 1st

Maturity  30 year term with final maturity on July 1, 2047

 No call for 10 years; callable at par thereafter

Amortization  Annual principal amortization payable on July 1

st subject to schedule

– First amortization payment July 1, 2028 (1% of par)

– Optional amortization (at issuer’s discretion) sized based on Fiscal Plan forecast 

 Pro rata to allowed claims:

– General Obligation Bonds

– COFINA Bonds

– GO Guarantee claims (1)

Allocation

Notes

(1) Allocation on account of GO Guarantee claims limited to deficiency claims after creditor recovery at issuer entity

4

CONFIDENTIAL WORKING DRAFT – ADVISORS EYES ONLY SUBJECT TO NDA

SUBJECT TO MATERIAL CHANGE

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Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 7 of 9
611287

CONFIDENTIAL - SUBJECT TO FRE 408

Term Sheet: Senior Cash Flow Bond

Security

Amount

Debt Service

Maturity

 Senior Cash Flow Bonds

– Structured as Turbo Capital Appreciation Bond with 5.00% Accrual Rate

– Subordinated in right of payment to the New Senior Bond

– Provisions for new debt issuance

 $8.0 billion

Allocation  Senior Tranche issued to holders of allowed GO / COFINA claims on account of 

deficiency

 Annual partial redemption of Accreted Value based on Flow of Funds described below (1)

 Any remaining CF Bond balances automatically forgiven on the 40 year anniversary of 

issuance

 Callable at the accreted value after 5 year anniversary

Mandatory Prepayment  Mandatory prepayment from 10% of the proceeds of any new GO debt issuance

– Split 75% / 25% between the Senior and Junior tranches respectively

Flow of Funds  For each fiscal year, all revenues available after (1) payment of GO Debt and (2) 

Government Expenditures will be allocated:

– 50% for debt service to the Cash Flow Bonds

– 50% to be retained by the Government for the General Fund

 Waterfall payments for Cash Flow debt service:

– First $250 million to be split 90% to the Senior CF Bond; 10% to the Junior CF Bond

– Any amounts in excess of $250 million to be split 60% to the Senior CF Bond; 40% to 

the Junior CF Bond

5

CONFIDENTIAL WORKING DRAFT – ADVISORS EYES ONLY SUBJECT TO NDA

SUBJECT TO MATERIAL CHANGE

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Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 8 of 9
611287

CONFIDENTIAL - SUBJECT TO FRE 408

Term Sheet: Junior Cash Flow Bond

 $2.0 billion

 Junior tranche issued on account of allowed claims for the following entities:

– HTA

– PRIFA

– PRCCDA

– MBA

Security

Amount

Debt Service

Maturity

Allocation

Mandatory Prepayment

 Junior Cash Flow Bonds

– Structured as Turbo Capital Appreciation Bond with 5.50% Accrual Rate

– Subordinated to the New GO Bond and the Senior Cash Flow Bond

– Provisions for new debt issuance

 Annual partial redemption of Accreted Value based on Flow of Funds as described in 

Senior Cash Flow Bond including waterfall provisions

 Any remaining CF Bond balances automatically forgiven on the 40 year anniversary of 

issuance

 Callable after 10 year anniversary at premium TBD

 Mandatory prepayment from 10% of the proceeds of any new GO debt issuance

– Split 75% / 25% between the Senior and Junior tranches respectively

6

CONFIDENTIAL WORKING DRAFT – ADVISORS EYES ONLY SUBJECT TO NDA

SUBJECT TO MATERIAL CHANGE

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Case:17-03283-LTS Doc#:240-10 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit J Page 9 of 9