Bankruptcy Rule 4001 Concise Statement

In accordance with Bankruptcy Rule 4001(c)(1)(B) and Local Rule 4001-2, below is a 

summary of selected terms of the Facility, together with references to the applicable sections and 

provisions of the Financing Order and the Credit Documents. 1

Material Term Summary 

Borrower The Puerto Rico Electric Power Authority, Title III debtor

Lender The Commonwealth of Puerto Rico, Title III debtor

Oversight Board Financial Oversight and Management Board for Puerto Rico

Revolving Facility A senior secured priming super-priority revolving credit loan facility in 

an aggregate amount at any one time outstanding of not in excess of 

$1.3 billion (subject to further approval by necessary governmental 

action of the Lender for any amounts in excess of $550 million), subject 

at any time to the then applicable Commitment of the Lender (the 

“Facility”). 

Agreement: § 1 (Definitions of “Revolving Credit Commitment”; 

“Acceptable Security Interest”) and 7-1; Order ¶ 2.

2

Commitment of the 

Lender

The aggregate revolving credit commitment of the Lender shall, on the 

effective date, be in an amount not to exceed $550 million, which may 

be increased subject to the following (the “Step Increase 

Requirements”): each such increase shall be (a) approved by the Lender 

and the Oversight Board in advance in writing and made in increments 

of $250 million each (each, a “Step Increase”) not to exceed the 

maximum amount of $1.3 billion, and (b) approved by necessary 

governmental action of the Lender in an amount not to exceed $1.3 

billion (the “Commitment”). For the avoidance of doubt, each Step 

Increase will require the approval of the Lender and the Oversight 

Board, but will not require the approval of the Title III Court.

Agreement: § 1 (Definition of “Revolving Credit Commitment”); 2-1;

Order ¶ 2.

Availability At any given time, the then applicable Commitment minus the Loans 

 1 The summaries contained in this summary are qualified in their entirety by the provisions of the documents 

referenced. To the extent anything in this Urgent Motion is inconsistent with such documents, the terms of the 

applicable documents shall control. Capitalized terms used in the summary chart but not otherwise defined have 

the meanings given to them in the Financing Order or the Credit Documents, as applicable.

2 References to the Order refer to the revised proposed Financing Order filed as Exhibit A to the Oversight 

Board’s reply brief in support of its motion to clarify the interim hearing on The Post-Petition Financing Motion 

[ECF No. 600-1].

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Material Term Summary 

outstanding as of that time (the “Availability”).

Until the earlier of (a) the Maturity Date; provided that unless extended 

by necessary governmental action new borrowings shall not be 

available after June 30, 2018 and (b) the Termination Date (as defined 

below) and so long as no default or event of default exists under the 

Facility that has not been cured or waived, upon satisfaction or waiver 

of the conditions precedent to loans as set forth in the final 

documentation for the Facility (collectively the “Credit Documents”), 

revolving loans under the Facility (“Loans”) shall be available to the 

Debtor; provided that the Loans in the aggregate at any one time 

outstanding shall not exceed the then applicable Commitment as 

approved by the Lender and the Oversight Board as set forth above 

(including any then-approved Step Increase); provided, however, upon 

60 days’ notice to the Debtor, if cash in the Puerto Rico Department of 

Treasury’s Treasury Single Account is projected to fall below $800 

million during such 60-day period and no third-party source of capital 

(e.g. a community disaster loan under the Stafford Act (42 U.S.C. § 

5121 et seq.,) (“CDL”)) is available to the Lender (a “Commonwealth 

Financing”), no further Loans shall be available under the Facility 

unless otherwise agreed to by the Lender with the consent of the 

Oversight Board. 

Subject to the terms and conditions of the final documentation for the 

Facility, the Loans may be borrowed, repaid and borrowed and shall be

available upon entry of the Financing Order confirming the provisions 

set forth in “Security and Priority” below, including granting to the 

Lender a perfected first priority priming lien on all Revenues for the 

full amount of all obligations under the Facility and otherwise in form 

and substance satisfactory to the Lender, the Oversight Board, and the 

Debtor; provided that, the amounts available under the Facility shall not 

exceed the Availability of the Lender as described above.

Agreement: § 1 (Definitions of “Revolving Credit Commitment”; 

“Suspension Event”), Article 2; Article 3; § 7-1; Order ¶ 2.

Security and Priority All obligations under the Facility shall constitute a superpriority 

administrative claim in the Title III Case pursuant to 11 U.S.C. § 

364(c)(1) and shall be secured by a perfected first priority priming 

security interest in all Revenues (as defined in the Trust Agreement) 

pursuant to 11 U.S.C. § 364(d). 

All payments under the Facility shall be payable from the General Fund

(as defined in the Trust Agreement) at the level of Current Expenses 

under the Trust Agreement and, upon confirmation of a plan of 

adjustment, as a superpriority administrative claim and, subject to the 

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Material Term Summary 

Carve Out (as defined below) before payment or distribution on other 

administrative claims and pre-petition claims (including those for 

Current Expenses) and senior to the repayment of the Power Revenue 

Bonds. 

The security interests, liens and superpriority administrative claim will 

be subject only to a carve-out for professional fees and costs of 

administration incurred during the Title III Case (as defined below) of 

the Debtor (as approved by the Court), any state matching requirements 

of Federal grants and loans and certain fees due and owing to the Office 

of the United States Trustee as set forth in the Title III Order 

(collectively the “Carve Out”). 

Agreement: § 2-6; § 7-1; Order ¶ 7,8.

Use of Proceeds The proceeds of the Loans shall be used to pay expenses relating to the 

Debtor’s operations including, without limitation, employee payroll and 

benefits, facilities maintenance costs that are not capital expenditures or 

infrastructure improvements, and normal operational materials, 

supplies, fuel and power supplies, vendor, and services payments 

(collectively, “Eligible Uses”) provided, in the event Commonwealth 

Financing becomes available, proceeds of such Commonwealth 

Financing may be used to reimburse amounts expended for Eligible 

Uses from September 6, 2017 until the funding of the Loans, if such 

Commonwealth Financing permits such reimbursement.

Agreement: §4-13 Order ¶ 10.

Adequate Protection Order ¶ 11.

Ineligible Uses Unless otherwise specifically consented to in writing by the Lender and 

the Oversight Board, the proceeds of the Loans shall not be used for 

debt service (including payment of any debt existing prior to the 

effective date of the Facility); capital improvements; repair or 

restoration of damaged public facilities; paying the non-federal share of 

any Federal program; tax refunds; lobbying; Title III costs including but 

not limited to judgments arising from Title III cases and related cases, 

and legal or advisory fees; deposits, transfers, or payments to accrual 

accounts, reserve funds, or contingency accounts that do not represent 

an actual, immediate cash disbursement to continue current government 

operations for essential services; administrative costs of Federal disaster 

assistance grants and loans; or disaster related expenditures eligible for 

reimbursement from FEMA or any other federal entity; any expense 

that is not a “Current Expense” under the Trust Agreement; or any 

expenses not authorized by Joint Resolution 16-2018 of the legislature 

of Puerto Rico (collectively, the “Ineligible Uses”). For the avoidance 

of doubt, none of the proceeds of the Loans shall be used for the 

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Material Term Summary 

payment of Professional Fees but may be paid from other sources of 

funds.

Agreement: § 4-13.

Budget Subject to the limitations on use of proceeds set forth in the Agreement, 

the Loans shall be available to fund disbursements consistent with the 

Debtor’s 13-week cash-flow budget setting forth all projected cash 

receipts and cash disbursements on a weekly basis for the Debtor as 

approved by the Lender and the Oversight Board (the “Initial 13-Week 

Budget,” and together with any updated 13-Week Budget approved by 

the Lender, the “13-Week Budget”) and thereafter the 13-Week Budget.

Disbursements for Eligible Uses (other than disbursements that are to 

be paid from funds provided by FEMA or any other federal entity that 

have been obligated, which shall not be subject to the test or limited by 

the 13-Week Budget) may only exceed those set forth in the applicable 

13-Week Budget for any cumulative four-week period (beginning with 

the period ending after the first full four-week period after the Facility 

is entered into) for Eligible Uses by 15% in the aggregate (the “Eligible 

Uses Variance”). 

All disbursements for Ineligible Uses (other than Ineligible Uses that 

are subject to the Carve Out or any FEMA reimbursable expense for 

contracts that have been obligated by FEMA and approved by the 

Oversight Board, which uses shall not be subject to the test or limited 

by the 13-Week Budget) may only exceed those set forth in the 

applicable 13-Week Budget for any cumulative four week period 

(beginning with the period ending after the first full four week period 

after the Facility is entered into) for Ineligible Uses by 15% in the 

aggregate (the “Ineligible Uses Variance”). 

The Debtor shall update the Initial 13-Week Budget no later than the 

Friday of the second week after the Initial Draw and every four weeks 

thereafter (the “Regular Updates”) and submit such updated 13-Week 

Budget to the Lender and the Oversight Board. Unless objected to by 

the Lender and the Oversight Board pursuant to the following 

provision, such updated 13-Week Budget pursuant to a Regular Update 

shall be the 13-Week Budget for all purposes under the Facility 

commencing on the first day of the period set forth in such updated 13-

Week Budget. The Lender and the Oversight Board shall have until 

noon on the 14th calendar day after receipt of the Regular Update to 

approve or object to a Regular Update. If either the Lender or the 

Oversight Board objects, the prior 13-Week Budget shall remain in 

effect until the end of the 13-week period, or the Debtor submits a 

revised budget that is not objected to by the Lender or the Oversight 

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Material Term Summary 

Board. 

Agreement: § 1 (Definitions of “Budget”; “Eligible Use Variances”; 

“Ineligible Use Variances”); 5-6; Order ¶ A.

Voluntary 

Prepayments

The Loans shall be prepayable by the Debtor in whole or in part at any 

time without premium or penalty.

Agreement: § 2-2.

Mandatory 

Prepayments

Promptly upon the receipt of any Revenues, the Debtor shall apply such 

Revenues to the repayment of the outstanding Loans; provided, that the 

Debtor may retain Revenues sufficient to (i) pay budgeted expenses for 

Ineligible Uses provided for in the 13-Week Budget, expenses for 

Ineligible Uses that are subject to the Carve Out, or any FEMA 

reimbursable expense for contracts that have been obligated by FEMA 

and approved by the Oversight Board and (ii) maintain an operating 

reserve of up to $300 million (which funds can be used at the discretion 

of the Debtor for expenses for Eligible Uses provided for in the 13-

Week Budget or for expenses for Ineligible Uses provided for in the 13-

Week Budget, expenses for Ineligible Uses that are subject to the Carve 

Out, or any FEMA reimbursable expense for contracts that have been 

obligated by FEMA or any other federal entity and approved by the 

Oversight Board).

Agreement: § 2-6.

Maturity Date The Maturity Date of the Facility shall be the 30th anniversary of the 

effective date of the Facility.

Agreement: Article 1 (Definition of “Maturity Date”).

Termination Date The Termination Date shall occur on the earliest of (i) the date on 

which all the Loans and other obligations thereunder have been 

indefeasibly repaid in full in cash (and the Commitment has been 

terminated), (ii) the effective date of a confirmed plan of adjustment in 

the Title III Case (unless an alternative treatment is agreed to by the 

Lender and consented to by the Oversight Board), and (iii) the date of 

termination of the Commitment and/or acceleration of any outstanding 

extensions of credit under the Facility following the occurrence and 

during the continuance of an Event of Default (as defined below).

Agreement: Article 1 (Definition of “Termination Date”); Order ¶ 5.

Modification of 

Automatic Stay

Order ¶ 14.

Interest Rate All Loans shall bear interest in the following amounts on the following 

schedule commencing on the effective date of the Facility according to 

the following schedule:

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Material Term Summary 

Interest Period Interest Rate

First Semi-Annual Period 0.00%

Second Semi-Annual Period 0.50%

Third Semi-Annual Period 1.00%

Fourth Semi-Annual Period 1.50%

Fifth Semi-Annual Period 2.00%

Sixth Semi-Annual Period 2.50%

Thereafter 3.00%

In addition, in the event the Lender funds any Loans with proceeds of a 

Commonwealth Financing, the interest rate on such Loans shall 

automatically step-up to be equal to the interest rate on such 

Commonwealth Financing (the “Step-Up”). In the event of a Step-Up, 

interest shall be payable on the same interest payment dates provided 

for in the Commonwealth Financing.

Agreement: §2-7.

Events of Default “Events of Default” under the Credit Documents shall include (i) the 

failure by the Debtor to pay, when due and payable, all or any portion 

of the obligations consisting of principal, interest, fees, or charges due 

to the Lender under the Facility, and (ii) after 30-days’ written notice, 

any breach of material covenants that have not been cured or waived. 

Upon an Event of Default, the Lender shall have the right to declare the 

Commitment terminated and/or to accelerate the repayment obligations 

under the Facility. 

Agreement: Articles 8 and 9; Order ¶ 5.

Other Provisions per 

Rule 4001(c)(1)(B), 

Not Applicable to the 

Facility

-Determination of validity of prepetition claims or liens

-Waiver of plan, exclusivity, 363/364 rights

-Establishment of plan milestones

-Releases of claims

-Indemnification

-Liens on causes of action under §§ 544, 545, 547, 548, 549, 553(b), 

723(a), or 724(a)

 

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