Hearing Date: February 15, 2018 at 9:30 a.m. (Atlantic Standard Time)

Objection Deadline: February 1, 2018 at 5:00 p.m. (Eastern Standard Time)

UNITED STATES DISTRICT COURT

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.1

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

PUERTO RICO ELECTRIC POWER AUTHORITY 

(“PREPA”), 

 Debtor.

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 4780-LTS

Court Filing Relates Only to PREPA 

and Shall Only be Filed in Case No. 

17-BK-4780 (LTS) and Main Case 

17-BK-3283 (LTS)

SUPPLEMENTAL DECLARATION OF DUSTIN MONDELL IN SUPPORT OF 

URGENT JOINT MOTION OF THE FINANCIAL OVERSIGHT 

AND MANAGEMENT BOARD FOR PUERTO RICO AND THE PUERTO 

RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY FOR ENTRY 

OF INTERIM AND FINAL ORDERS (A) AUTHORIZING POSTPETITION SECURED 

FINANCING, (B) GRANTING PRIMING LIENS AND PROVIDING SUPERPRIORITY 

ADMINISTRATIVE EXPENSE CLAIMS, (C) MODIFYING THE AUTOMATIC STAY,

(D) SCHEDULING A FINAL HEARING, AND (E) GRANTING RELATED RELIEF

 1 The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number 

listed as a bankruptcy case number due to software limitations and the last four (4) digits of 

each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of 

Puerto Rico (Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax ID: 

3481); (ii) Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 

17 BK 3284-LTS) (Last Four Digits of Federal Tax ID: 8474); (iii) Employees Retirement 

System of the Government of the Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case 

No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax ID: 9686); (iv) Puerto Rico Highways 

and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) (Last Four 

Digits of Federal Tax ID: 3808); and (v) Puerto Rico Electric Power Authority (“PREPA”) 

(Bankruptcy Case No. 17 BK 4780 (LTS)) (Last Four Digits of Federal Tax ID: 3747).

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Exhibit A Dustin Mondell Supplemental Declaration Page 1 of 7
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Pursuant to 28 U.S.C. § 1746, I, Dustin Mondell, hereby declare as follows under penalty 

of perjury under the laws of the United States of America:

1. I submit this declaration (the “Supplemental Declaration”) to supplement my 

declaration, dated January 27, 2018 (the “Declaration”), submitted in support of the Urgent Joint 

Motion of the Financial Oversight and Management Board for Puerto Rico and the Puerto Rico 

Fiscal Agency and Financial Advisory Authority for Entry of Interim and Final Orders (A) 

Authorizing Postpetition Secured Financing, (B) Granting Priming Liens and Providing 

Superpriority Administrative Expense Claims, (C) Modifying the Automatic Stay, (D) Scheduling 

a Final Hearing, and (E) Granting Related Relief [ECF No. 549] (the “Postpetition Financing 

Motion”) and annexed thereto as Exhibit D.2

2. Except as otherwise indicated, all facts and opinions set forth in this Supplemental 

Declaration are based upon: (i) my personal knowledge; (ii) my review of relevant documents 

provided to me, including documents provided by AAFAF and the Debtor and their respective 

professionals and employees; and (iii) my views, based upon my experience and knowledge of 

the Debtor and its financial condition.

UPDATE ON MARKETING PROCESS

3. As described in my Declaration, as part of a marketing effort to obtain alternative 

financing, professionals from Rothschild have been in contact with ten potential funding 

providers, which consisted of four existing PREPA, Commonwealth, and COFINA bondholders 

and bondholder groups, and six third parties capable of providing financing of this magnitude. 

Rothschild has since also been in contact with an additional potential funding provider that is 

 2 Defined terms used but not defined in this Supplemental Declaration shall have the meanings 

given to them in the Postpetition Financing Motion or the Declaration.

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operating under an existing NDA. Rothschild requested that interested parties submit initial 

indications of interest by February 2, 2018. In my experience it is not unusual to ask for initial 

indications of interest in a week to ten-day timeframe.

4. As of this date, five prospective lenders have responded. Two parties informed 

Rothschild that they would not be submitting financing proposals. One of these two parties cited 

an interest in potentially participating in a financing in the future, but stressed that a viable 

transaction would likely require additional collateral, stronger lender protections and higher rates 

of return than those proposed in the Facility.

5. Three of the five prospective lenders who have responded have provided 

indications of interest (the “Indications”). Attached as Exhibit A is a side-by-side comparison of 

the Indications compared to the proposed terms of the Facility. The Indications are each subject 

to a variety of additional terms and conditions, including resolution of certain litigation, market 

syndication, negotiation of definitive documentation, and other similar requirements. Two of the 

Indications require priming liens and superpriority administrative claims and the other is unclear 

as to the complete security and priority structure. As of this date, none of the Indications is 

viable to address PREPA’s immediate liquidity demands.

GDB DEPOSITS

6. I understand that certain creditors have asserted that PREPA can increase its 

short-term liquidity by making immediate or near-term withdrawals from amounts it has on 

deposit at the Government Development Bank for Puerto Rico (the “GDB”). This is not so. 

GDB is an insolvent public instrumentality in the process of winding down its operations and 

resolving creditor claims through the recently enacted GDB Debt Restructuring Act, Act No. 

109-2017, and a Title VI process under PROMESA. In light of its fiscal situation, GDB is 

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currently operating pursuant to various laws and executive orders that limit disbursements by 

GDB and prohibit deposit withdrawals. GDB’s creditors, of which PREPA is one, are 

collectively owed more than $7.3 billion. This includes more than $3.5 billion in deposits almost 

entirely from public entities such as municipalities, public corporations and other government 

entities, and more than $3.7 billion in publicly held debt. As of December 31, 2017, however, 

GDB’s unrestricted cash was less than 5% of the $7.3 billion in competing claims. Moreover, 

there are multiple pending lawsuits requesting disbursements of GDB deposits, which GDB is 

not able to honor. Upon the completion of GDB’s restructuring, PREPA and all other creditors 

of GDB will be able to obtain recoveries on amounts owed to them by GDB, in accordance with 

the treatment to be given to each pursuant to Act No. 109-2017, but such amounts cannot be 

disbursed to PREPA or to any other creditor of GDB until the resolution of the multiple 

competing creditor claims and litigation. 

[Space is intentionally left blank.]

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Exhibit A Dustin Mondell Supplemental Declaration Page 4 of 7
I declare under penalty of perjury under 28 U, S. C. f 1746 that the foregoing is true and 

correct. 

Executed this day of February, 2018 at Pir ~ /c ~~ 

Dustin Mondell 

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Exhibit A

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 2 years

 If CDL proceeds become available, 

facility will be refinanced by those 

proceeds

Indicative terms overview

PREPA financing

 Commonwealth government, which may 

lend to PREPA Borrower

 Commonwealth may lend to PREPA Use of 

Proceeds

Facility  Superpriority loan to Commonwealth

Commitment  Up to $1.1b

 Additional $350m available after 9/30/18

Proposal 1

Fees  0.0% if compliance with milestones

 Certain fees if milestones not met or EoD

Interest Rate

 0.0% if compliance with non-financial 

progress milestones

 If milestones not met or EoD:

– 5.5% plus 2.0% default interest

Proposal 2 Proposal 3

 Post-petition superpriority administrative 

expense of Commonwealth

Security and 

Collateral

 PREPA

 Current expenses, fees/expenses

 Senior secured superpriority tax-exempt 

revolving notes

 Up to $1.1b 

 2.0% commitment fee

 $250,000 arranger fee

 $40,000 p.a. administrative agent fee

 1 month LIBOR plus 8.0%

 1% LIBOR floor

 1.0% unused line fee

 12.0% default interest rate

 10 bps – 150 bps rate increase during 30 

days upon cash flow reporting default, 

default rate thereafter until cured

 Post-petition administrative expense 

claim status, senior to all other 

superpriority administrative claims

 1L on all revenues and fees collected by 

PREPA 

 PREPA

 Expenses outlined in 13-week forecast

 Senior secured superpriority term loan

 Up to $1.3b

 1.0% OID

 0.50% arranger fee

 LIBOR plus 7.0%

 1% LIBOR floor

 +2.0% default interest rate, increasing by 

1.0% every 6 months

 Post-petition administrative expense 

claim status

 Priming lien on PREPA revenue 

 First priority lien on all unencumbered 

PREPA property, junior lien on 

encumbered property

 PREPA

 Fund operational uses

 Superpriority post-petition senior secured 

credit facility

 Up to $1.3b

Commonwealth

 None

 Interest rate step-ups from 0.00% to 

3.00% at 0.50% intervals upon each 6-

month interval

 First priority security interest on all 

revenues collected by PREPA and 

revolving credit loan proceeds

Maturity Date

 The earliest of (i) 30th year since loan 

funding, (ii) effective date of a confirmed 

PoA or (iii) event of default

 Facility will be refinanced by proceeds 

from CDL or similar federal disaster 

recovery financing

 The earlier of: effective date of 

Commonwealth POA and 3rd 

anniversary after DIP Closing Date

 If CDL becomes available at equal or 

better terms, facility will be refinanced by 

CDL

 The earlier of: (i) dismissal of the Title III 

Proceeding and emergence date of 

PREPA, (ii) Effective Date of a POA, (iii) 

date of acceleration of the DIP and (iv) 2 

years from closing

 Facility will be refinanced by proceeds 

from CDL or similar federal disaster 

recovery financing

 Negotiation of loan documents

 Agreement to case milestones

 Certain legal stipulations

 Entry of Title III Order

Material 

Conditions to 

Closing/Initial 

Funding

 Agreement on loan documentation

 Syndication of loan

 Oversight Board Approval; Entry of Title III 

Order

 No material adverse change since June 1, 

2017 (other than the impacts of the Title II 

Case or the impacts of Hurricane Irma and 

Maria

 Payment of fees and costs

 Resolution of litigation surrounding 

constitutionality of PROMESA / appointment of 

FOMB

 Clarity over enforcement rights, future PREPA

business plan, timing of privatization

 Completion of diligence / loan syndication

 Agreement on loan documentation / milestones

 Entry of Title III Order

 Entry of Title III Order 

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