UNITED STATES DISTRICT COURT

DISTRICT OF PUERTO RICO

In re:

THE FINANCIAL OVERSIGHT AND MANAGEMENT 

BOARD FOR PUERTO RICO,

as representative of

THE COMMONWEALTH OF PUERTO RICO, et al.,

Debtors.1

PROMESA

Title III

No. 17 BK-3283-LTS

(Jointly Administered)

In re:

THE FINANCIAL OVERSIGHT AND MANAGEMENT 

BOARD FOR PUERTO RICO,

as representative of

THE PUERTO RICO HIGHWAYS AND 

TRANSPORTATION AUTHORITY,

Debtor.

PROMESA

Title III

No. 17 BK-3567-LTS

DECLARATION OF OJAS N. SHAH IN RESPECT

OF CONFIRMATION OF FOURTH AMENDED TITLE III PLAN OF ADJUSTMENT

OF THE PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY

I, Ojas N. Shah, hereby declare and state as follows:

 1

The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number 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) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) 

(Last Four Digits of Federal Tax ID: 3808); (iv) 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); (v) Puerto Rico Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17 BK 4780-LTS) (Last Four 

Digits of Federal Tax ID: 3747); and (vi) Puerto Rico Public Buildings Authority (“PBA”) (Bankruptcy Case No. 19-

BK-5523-LTS) (Last Four Digits of Federal Tax ID: 3801). Title III case numbers are listed as Bankruptcy Case 

numbers due to software limitations.

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1. I am a Partner at McKinsey & Company (“McKinsey”). I submit this declaration 

(the “Declaration”) in respect of confirmation of the Fourth Amended Title III Plan of Adjustment 

of the Puerto Rico Highways and Transportation Authority [Case No. 17-BK-3567-LTS, ECF No. 

1350] (the “Plan”).

2

 

2. Unless otherwise indicated, all facts set forth herein (or incorporated by reference 

herein) are based upon my personal knowledge, my review of materials published or directly 

provided by the Government of Puerto Rico or its advisors, materials provided by advisors for the

Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), or my expert 

opinion based on the Report (defined below), the Plan, and the documents related thereto.

3. My testimony in this Declaration is in four sections. The first section describes my 

background and qualifications and the Oversight Board’s engagement of McKinsey in connection 

with these Title III cases. The second section provides an overview of the Report, which analyzes

creditor recoveries if the Title III case for HTA is dismissed. The third section describes the 

methodology used in the Reports, including (i) key assumptions that underlie the estimate of

resources available to pay creditor claims outside Title III, (ii) the various financial obligations 

HTA would expect to have if its Title III case is dismissed, and (iii) the waterfall of funds assumed

for each fiscal year covered by the Report to pay expenses and creditor claims. The fourth section 

discusses expected aggregate recoveries for creditors of HTA if HTA’s Title III case is dismissed 

and compares those recoveries to the aggregate recoveries for creditors of HTA under the Plan.

 2 Capitalized terms not defined herein shall have the meaning ascribed to them in the Plan or the Disclosure Statement 

for the Third Amended Title III Plan of Adjustment of the Puerto Rico Highways and Transportation Authority

(Debtor’s Exhibit 53) [Case No. 17-BK-3567-LTS, ECF No. 1302-13] (the “Disclosure Statement”), as applicable.

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I. Background and Qualifications

4. I am a Partner at McKinsey, where I have worked since 2014. In my role as Partner, 

I have led client and consulting teams in several advisory and transformation assignments for 

underperforming or distressed companies as well as for the Commonwealth. Prior to joining 

McKinsey in 2014, I was a Director at AlixPartners in its Turnaround & Restructuring Services

group. 

5. In or around November 2016, McKinsey was retained as a consultant by the 

Oversight Board, who is the Title III representative of the Commonwealth pursuant to section 

315(b) of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”). 

Among other things, McKinsey’s scope of work has included support to the Oversight Board in 

connection with its restructuring and plan of adjustment process for the Commonwealth, ERS, and 

PBA (collectively, the “Prior Debtors”), including the preparation of an analysis of the estimated 

range of recoveries that would be available to creditors if a plan of adjustment is not confirmed, 

the Title III case of each of the Prior Debtors was dismissed, and the stay of debt enforcement is 

terminated, which can be utilized by the Court in connection with the Best Interest Test (defined 

below) under PROMESA and to inform the Oversight Board in its formulation of plans of 

adjustment. McKinsey’s analysis for the Prior Debtors included the Best Interests Test reports for 

the Commonwealth [Case No. 17-BK-3283-LTS, ECF No. 17628, Exhibit P], ERS [Case No. 17-

BK-3283-LTS, ECF No. 17628, Exhibit P] and PBA [Case No. 17-BK-3283-LTS, ECF No. 

18369-1], which reports were cited by the Court in its Order and Judgment Confirming Modified 

Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, the 

Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the 

Puerto Rico Public Buildings Authority [Case No. 17-BK-3283, ECF No. 19813], confirming the 

Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, 

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et al., dated January 14, 2021 [Case No. 17-BK-3283-LTS, ECF No. 19784] (the “Prior Debtors’

Plan”).

6. Just as we did in connection with the Prior Debtors’ Plan, for the HTA Plan, we 

produced a Best Interests Test Report for the Puerto Rico Highways and Transportation Authority

(Debtor’s Exhibit 54) [Case No. 17-BK-3567-LTS, ECF No. 1354-1] (the “Report” attached as 

Exhibit A hereto)

3 which contains two documents. The first document, the “Analysis of Creditor 

Recoveries should the Title III Case be Dismissed for Creditors of HTA” (the “Analysis of Creditor 

Recoveries”), includes an analysis of creditor recoveries against HTA assuming its Title III Case 

was dismissed on June 30, 2022. The second document, the “Best Interests Test Analysis –

Assumptions” (the “Assumptions Document”), was prepared by legal advisors to the Oversight 

Board and details various assumptions about certain litigation outcomes and other contingencies 

if the Title III case for HTA is dismissed. McKinsey accepted as true, accurate, and appropriate 

all of the legal assumptions set forth in the Assumptions Document and certain other financial 

information provided to it, such as schedules detailing estimates of outstanding bond debt, 

perspectives on cash balances, and other financial data and claim amounts. The analysis contained 

in the Report is discussed below.

II. The “Best Interests of Creditors Test” in PROMESA Section 314(b)(6)

7. As articulated by this Court’s prior rulings, I understand PROMESA section 

314(b)(6) requires a plan of adjustment be in the best interests of creditors, which “requires the 

Court only to consider whether creditors of [HTA] in the aggregate receive an equal or greater 

 3 The Report (Debtor’s Exhibit 54) [Case No. 17-BK-3567-LTS, ECF No. 1354-1] attached hereto as Exhibit A is 

amended from the Report previously attached as Exhibit J to the Disclosure Statement (Debtor’s Exhibit 53) [Case 

No. 17-BK-3567-LTS, ECF No. 1302-13]. The Redline of Best Interests Test Report for the Puerto Rico Highways 

and Transportation Authority (Debtor’s Exhibit 55) [Case No. 17-BK-3567-LTS, ECF No. 1354-2], setting forth the 

changes between the two Reports, is attached hereto as Exhibit B. 

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recovery on their Claims pursuant to the Plan than they would outside of Title III if [HTA’s] 

Title III case were dismissed and creditors exercised their remedies” (the “Best Interests Test”). 

[Case No. 17-BK-3283-LTS, ECF No. 19812 ¶ 212] (emphasis original). Accordingly, the Report

provides an estimate of the range of recoveries that would be available to creditors if the Plan is 

not confirmed, the Title III case of the HTA is dismissed, and the stay of debt enforcement is 

terminated.

8. An analysis of creditor recoveries in such hypothetical circumstances requires 

application of a number of assumptions, including: (i) estimates of the resources that would be 

available for debt service, which requires an assessment of HTA’s available cash, revenues, and 

operating expenses in the absence of a confirmed plan of adjustment; (ii) the outstanding creditor 

obligations due and payable that would exist outside of Title III; and (iii) the priority in which 

creditor claims would be paid outside Title III, which in certain circumstances requires 

consideration of assumptions regarding the potential outcome of litigation matters.

9. Because potential litigation outcomes (and certain other assumptions) are 

inherently uncertain, the Report estimates a likely range of potential recoveries utilizing different 

assumptions to calculate projected creditor recoveries for the most likely outcome as determined 

by the Oversight Board’s financial and legal advisors (the “Main Assumptions”). In addition, the 

Report estimates the range of creditor recoveries under certain Alternative Scenarios. For those 

alternatives, the Report considered certain assumptions denoted “litigation risk” as set forth in the 

Assumptions Document.

10. Based on the recoveries outlined in the Report, creditors in the aggregate will 

receive a percentage recovery on their claims under the Plan that is within the range of projected 

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recoveries in the Report for such creditors using the Main Assumptions and under most Alternative 

Scenarios.

III. Methodology Used in the Report

11. The Report projects expected recoveries for claimholders of HTA if the Title III 

case for HTA were dismissed on 11:59 p.m. on June 30, 2022 (the “Effective Date”). We used 

June 30, 2022 because the 2022 Certified Fiscal Plan for HTA (the “Fiscal Plan”) from which the 

Report draws upon contains annual projections corresponding to Puerto Rico’s fiscal year of July 1 

through June 30. 

A. Legal Assumptions 

12. To reflect a range of possible outcomes for claimholders outside Title III given the 

various possible outcomes of litigation regarding, among other things, alleged creditor priorities, 

property rights, and the scope of security interests and liens, the Report includes estimates of 

(a) claimholder recoveries if each of the Main Assumptions for each of the Debtors is realized and 

(b) a range of alternative claimholder recoveries to account for certain litigation and other risks. 

B. Calculation of creditor recoveries

13. Our analysis relies on three components to calculate recoveries available to 

creditors: the resource envelope (which utilizes the revenue and expenditure projections contained 

in the Fiscal Plan, which is assumed to remain in effect after dismissal of the Title III case with 

certain adjustments); outstanding debt; and priorities for distribution of funds. The total amount 

of resources available to pay creditors’ claims is referred to as the “Resource Envelope” herein 

and in the Report.

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C. The Resource Envelope

14. The Resource Envelope in any year is the sum of (a) starting cash available for debt 

and (b) the surplus generated by HTA over Fiscal Years 2023–51 (which are the years covered by 

the Fiscal Plan).

15. Starting cash available for debt service. The first element of the Resource Envelope

is an estimate of starting cash available for debt service. Our cash estimates reflected in the Report 

were based on information available to us at the time the Report was created and do not reflect 

more recent information regarding cash balances. The starting cash in the Report available to 

creditors is estimated to be $58 million and consists of the sum of unrestricted cash less an 

assumption for “minimum cash requirements.” The minimum cash requirements for HTA is 

estimated to be $102.5 million based on a cash analysis provided by the Oversight Board. 

(Debtor’s Exhibit 17) [Case No. 17-BK-3567-LTS, ECF No. 1299-19].

16. Annual surplus generated by HTA. HTA revenues include toll fare and fine 

revenues, fares from Tren Urbano, and appropriations and grants from the Commonwealth 

government and the U.S. federal government, among other sources. HTA’s expenses include (i) 

operating expenses, which includes salaries, retirement costs, and related benefits, and amounts 

related to the operation and maintenance of toll plazas, and (ii) capital expenses which relate to 

repair and maintenance of roads. HTA’s annual surplus is the amount by which its total revenues 

exceed its total expenses.

17. The Resource Envelope in the Report reflects modifications to the Fiscal Plan 

projections of certain expenditures to account for the absence of Title III protections and the Plan. 

For example, professional fees are adjusted to upward reflect anticipated future litigation and the 

dismissal of the Title III cases. The Oversight Board’s expenditures are also adjusted upward, as 

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it is assumed the Oversight Board will continue to exist as the requirements for dissolution of the 

Oversight Board as defined by PROMESA would not be met if the Title III case is dismissed.

D. Debt Obligations and Outstanding Debt 

18. Debt Obligations and Outstanding Debt. The Report includes contractually 

required payments on outstanding debt and other claims against HTA in the absence of a plan of 

adjustment. HTA’s debt and other obligations aggregate approximately $8.323 billion as of the 

Effective Date of the Report. This amount includes (a) $5.150 billion in HTA bond debt, including 

principal and interest (accrued through the Report’s Effective Date), net of those amounts paid 

pursuant to the Stipulation (defined in the Analysis of Creditor Recoveries), (b) a $2.682 billion 

claim held by the Government Development Bank (the “GDB”) Title VI Public Entity Trust, 

including principal and interest (accrued through the Report’s Effective Date) (the “GDB/HTA 

Loans”), and (c) $491 million in unsecured claims, comprised of (i) $255 million in HTA general 

unsecured claims (excluding eminent domain claims and federal claims), (ii) $42 million in 

eminent domain claims, to be paid upon entry of a final order with respect to each claim, (iii) $21

million in federal claims, to be paid in equal installments over forty years from and after the third 

anniversary of the Effective Date of the analysis, and (iv) $173 million with respect to a loan from 

the Commonwealth to HTA. These amounts do not include amounts owed with respect to the 

HTA Moscoso Bonds, which are projected to be paid in full both pursuant to the Plan and in the 

Report. 

19. In computing the amount of unsecured claims against HTA, the Report relied upon 

the accuracy of the estimates of such claims provided by other Oversight Board advisors, including 

those estimates set forth in the Declaration of Jay Herriman in Respect of Confirmation of Fourth 

Amended Title III Plan of Adjustment of the Puerto Rico Highways and Transportation Authority

[Case No. 17-BK-3567-LTS, ECF No. 1355] (the “Herriman Declaration”), filed 

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contemporaneously herewith. The Report assumed there is no creditor debt acceleration based on 

guidance from the Oversight Board’s legal advisors.

E. Claimholder Recovery and Priority Methodology

20. Exhibit 1 of the Report sets forth the assumed waterfall of distributions to various 

claimholders using the Main Assumptions. Specifically, it is assumed HTA bondholders have a 

contractual right to compel HTA to transfer funds to the sinking fund for payment on the HTA 

bonds, but not a perfected security interest in revenues earned by HTA’s four pledged toll roads

(the “Pledged Toll Roads”). In the absence of a perfected security interest in such revenues, the 

Report assumes all operating expenses and capital expenses will be satisfied in each year prior to 

payment of debt service. Then, all payments due and owing on HTA bonds are paid ratably with 

unsecured claims from the excess revenues from the Pledged Toll Roads. Once all HTA bonds 

are paid indefeasibly in full, any remaining excess revenues from the Pledged Toll Roads is used 

to make payments respecting the GDB/HTA Loans. With respect to revenues earned from sources 

other than the Pledged Toll Roads, any excess after payment of operating expenses and capital 

expenses are paid ratably to unsecured claims and to the GDB/HTA Loans.

IV. The Estimated Likely Range of Recoveries Available to the Creditors of HTA

21. The Report estimates a range of aggregate recoveries for all claimholders of HTA

if each Title III case was dismissed as of June 30, 2022 by aggregating payments to each creditor 

class and applying an assumed annual 5% discount rate for all projected future payments. As 

summarized in the chart immediately below and set forth in greater detail in this Declaration and 

the Report, when utilizing the Main Assumptions, the creditors of HTA, in the aggregate, will 

receive a recovery on their claims under the Plan in the aggregate that is within the range of the 

projected recoveries for such claimholders in the aggregate in the Report.

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Aggregate Plan Recoveries for HTA 

Claimholders

(% and $)

Aggregate Recoveries in the Report for 

HTA Claimholders

(% and $)

24%; $1,630 million 11% to 28%; $706 million to $1,847 million

22. Set forth below is a more detailed discussion and comparison of estimated likely 

range of claimholder recoveries outside Title III for HTA to such claimholders’ recoveries under

the Plan.

A. HTA Claimholder Recoveries in the Best Interests Test Analysis

i. Recoveries with the Main Assumptions

23. The estimated likely range of recoveries available for claimholders of HTA with 

the Main Assumptions are found in Exhibit 2 in the Report. The analysis makes various 

assumptions that affect recoveries to claimholders, some of which are discussed above. The

Report assumes debt service will not be paid until after all operating and capital expenses are first 

satisfied. 

24. HTA bondholders are projected to receive an estimated aggregate recovery outside 

Title III with a net present value as of June 30, 2022 of $616 million to $1,697 million. The 

GDB/HTA Loans receive an estimated aggregate recovery of $44 million to $61 million outside 

Title III. Unsecured claims, including general unsecured claims, eminent domain claims, federal 

claims, and a loan from the Commonwealth to HTA, receive an estimated aggregate recovery 

between $46 million and $89 million outside Title III.

25. In the aggregate, outside of Title III, holders of claims against HTA receive an 

estimated recovery of $706 million to $1,847 million. This implies an aggregate recovery of 11% 

to 28% for all claims assuming $6,705 million in outstanding debt and other obligations using

principal plus interest accrued as the HTA Petition Date as the denominator so recoveries under 

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the Plan can be compared with recoveries outside Title III. Thus, recoveries under the Plan, which 

are projected to be 24%, are within the range of recoveries outside of Title III. 

ii. Alternative Scenarios

26. In addition to calculating claimholder recoveries with the Main Assumptions, the 

Report estimates creditor recoveries in three alternatives where certain of the Main Assumptions

are not realized. The estimated likely range of recoveries available for claimholders of HTA in 

these three Alternative Scenarios, each discussed below, are found in Exhibit 5 to the Report.

27. The first Alternative Scenario, shown in Exhibit 3 to the Report, assumes a court 

finds HTA bondholders have a security interest in all revenues produced by the Pledged Toll 

Roads, meaning HTA must service its bond debt obligations before using these revenues to pay 

any operating expenses, capital expenses, or any other unsecured obligations of HTA. However, 

in this scenario, the Report also assumes the court would allow HTA to use toll revenues to satisfy 

HTA’s operating and capital expenses before debt service to the extent necessary to prevent an 

interruption in vital public services. 

28. In the second and third Alternative Scenarios, shown in Exhibit 4 to the Report,

4 a 

court also finds HTA bondholders have a security interest in all revenues produced by the Pledged 

Toll Roads. However, in these scenarios, a court would not permit HTA to use toll revenues to 

pay expenses before servicing debt. We considered two possibilities using this basis.

29. In Alternative Scenario 2, the Commonwealth agrees to fund all of HTA’s capital 

and operating expenses not associated with the Pledged Toll Roads to support Puerto Rico’s 

transport system. The Commonwealth also agrees to fund capital expenses (but not operating 

expenses) of the Pledged Toll Roads to prevent the deterioration of conditions on major roads of 

 4 Exhibit 4: Distribution waterfall considered in Alternative Scenarios 2 and 3.

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the island. HTA Bondholders agree that funds in which they have a security interest can be spent 

on operating expenses of the Pledged Toll Roads (but not capital expenses) to ensure the continued 

operation of toll plazas and sustain recoveries over time (thus voluntarily reducing their short-term 

recoveries).

30. In Alternative Scenario 3, the Commonwealth agrees to fund all of HTA’s capital 

and operating expenses, excluding those related to the Pledged Toll Roads. HTA Bondholders 

agree that funds in which they have a security interest can be spent on both operating and capital 

expenses of the Pledged Toll Roads, to ensure the continued operation of toll plazas and sustain 

recoveries over time, thus voluntarily reducing their short-term recoveries.

(a) Summary Chart of Claimholder Recoveries Under the Various 

Assumptions

31. Set forth below is a chart showing aggregate range of recoveries based on the Main 

Assumptions and under the three Alternative Scenarios. The percentage recoveries below 

represent the net present value of creditor recoveries in each of the assumptions as a percentage of 

all debt and other obligations as of the HTA Petition Date (applying a 5% discount rate to projected 

future payments). Aggregate recoveries pursuant to the Plan, which, as set forth in paragraph 35

are approximately $1,630 million, are within the range of recoveries under the Main Assumptions, 

Alternative Scenario 1 and Alternative Scenario 3 as well as just below the narrow recovery range 

of Alternative Scenario 2.

Main 

Assumptions

Alternative 

Scenario 1

Alternative 

Scenario 2

Alternative 

Scenario 3

Ranges of HTA 

Creditor 

Recoveries (% and 

$)

11% to 28%;

$706 million to 

$1,847 million

11% to 28%;

$706 million to 

$1,847 million

26% to 28%;

$1,769 million to 

$1,854 million

16% to 29%; 

$1,045 million 

to $1,941 

million

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iii. Claimholder Recoveries Pursuant to the Plan

32. I understand that in determining if the Plan is in the best interests of creditors, the 

Court may consider how creditor recoveries outside of Title III compare with what creditors will 

receive pursuant to the Plan. Accordingly, I have examined creditor recoveries pursuant to the 

Plan, discussed below.

33. As set forth in the Disclosure Statement, Classes 1–13 represent the claims of 

holders of HTA Bonds. These Classes include: the holders of HTA 1968 Bonds (Classes 1–4); 

HTA 1998 Senior Bonds (Classes 5–9), and HTA 1998 Subordinated Bonds (Classes 10–13). The 

claims in such classes as of the HTA Petition Date total an estimated $4,238 million, which 

excludes interest accrued after the HTA Petition Date. Pursuant to the Plan, these claims are 

projected to receive $1,520 million in consideration, consisting of New HTA Bonds.

34. The additional classes of claims against HTA under the Plan include: Eminent 

Domain/Inverse Condemnation Claims (Class 15); HTA General Unsecured Claims (Class 16); 

HTA/GDB Claims (Class 17); and Federal Claims (Class 20). The claims in such classes, as set 

forth in the Disclosure Statement and/or the Herriman Declaration, total an estimated $2,467

million, and, pursuant to the Plan, are projected to receive $111 million in cash. HTA Moscoso 

Bond Claims (Class 14) total an estimated $104 million. As this class of claims is projected to 

receive a 100% recovery either pursuant to the Plan or in the Report, it is not included in the

analysis and the calculations set forth herein.

35. In the aggregate, there is an estimated $6,705 million in claims against HTA being 

treated under the Plan, which are projected to receive $1,630 million in distributions pursuant to 

the Plan, for an aggregate recovery of 24% for all claimholders. When restriction fees and 

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consummation costs payable to certain holders of HTA Bonds and to the holder of the GDB/HTA

Loans are included, realized HTA creditor recoveries are even higher.

Conclusion

36. Accordingly, based on the information presented and analyzed in the Report and 

the recoveries in the Plan, I conclude that the Plan yields creditors of HTA present value recovery

in the aggregate that is within the range of the amounts creditors would receive outside Title III.

[Remainder of Page Intentionally Left Blank]

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Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true 

and correct to the best of my knowledge, information, and belief.

Dated: August 7, 2022 _/s/ Ojas N. Shah_____________________

New York, New York Ojas N. Shah

Partner, McKinsey & Company

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Exhibit A

HTA Best Interests Test Report

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Analysis of Creditor Recoveries should the Title III Case be Dismissed for Creditors of the 

Puerto Rico Highways and Transportation Authority (“HTA”)

This analysis assesses the recoveries available to creditors of HTA on the basis of available 

remedies under non-bankruptcy laws, including the Constitution of the Commonwealth of 

Puerto Rico. Pursuant to section 314(b)(6) of PROMESA,1 a proposed Plan of Adjustment 

should be “feasible and in the best interest of creditors, which requires the court to consider 

whether available remedies under non-bankruptcy law and the constitution of the territory 

would result in greater recoveries for the creditors than provided by the plan.” This analysis 

provides an estimated range of recoveries available to creditors if the stay of debt enforcement 

is terminated, no Plan of Adjustment for HTA is confirmed, and the Title III case for HTA is 

dismissed.

The analysis was prepared by McKinsey & Company Puerto Rico Consulting, Inc. (“McKinsey 

& Company”). Proskauer Rose LLP and O’Neill & Borges LLC,2 legal advisors to the 

Financial Oversight and Management Board for Puerto Rico (“FOMB”), provided McKinsey 

& Company with a set of legal assumptions used in the preparation of this analysis. The legal 

assumptions are included in Appendix 1 of this document. FOMB’s financial advisors provided 

McKinsey & Company with financial information used in the preparation of this analysis. Such 

financial information included schedules detailing estimates of outstanding bond debt, 

estimates of cash balances, and other financial data. McKinsey & Company also relied on data 

published by or directly provided by HTA and the Government of Puerto Rico and their 

respective advisors. 

McKinsey & Company has accepted as true, accurate, and appropriate all the legal and 

financial information and assumptions provided by Proskauer Rose LLP, O’Neill & Borges 

LLC, other FOMB advisors, and the Government of Puerto Rico, HTA, and their respective

advisors. McKinsey & Company has not independently verified any of the information or 

assumptions received from Proskauer Rose LLP, O’Neill & Borges LLC, other FOMB 

advisors, the Government of Puerto Rico, HTA, and their respective advisors, nor does it take 

any independent position with respect to this information and these assumptions.

The assumptions, projections, and estimates used in the analysis are inherently subject to 

business, economic, and political uncertainties, and, therefore, are subject to change. McKinsey 

& Company makes no representation or warranty that the actual recoveries available to or 

potentially realized by creditors on the basis of available remedies under any laws, including 

the Puerto Rico Constitution, would or would not approximate the estimates and assumptions 

represented in the analysis, and actual results may vary materially from those shown herein. 

McKinsey & Company does, however, represent that the recovery range identified herein is its 

best estimate of such recoveries based on the information provided to it.

 1 PROMESA means the Puerto Rico Oversight, Management and Economic Stability Act.

2 Proskauer Rose LLP and O’Neill & Borges LLC are sometimes referred to as “FOMB’s legal advisors” in this analysis.

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OVERALL METHODOLOGY

Following guidance provided by FOMB’s legal advisors, the analysis assumes the PROMESA 

Title III case for HTA is dismissed and PROMESA Titles I and II continue to apply. Therefore, 

the analysis assumes the automatic stay of debt enforcement terminates, and the FOMB 

remains in place and will continue to certify HTA Fiscal Plans, and enforce implementation of 

budgets, subject to any debt enforcement in excess of the budget the Puerto Rico courts would 

order. The analysis further assumes creditors would pursue legal action against HTA to recover 

the amounts they claim they are owed. 

This analysis is based on the revenue and expenditure projections as contained in the 2022

HTA Certified Fiscal Plan. The analysis relies on three components to calculate potential 

recoveries available to HTA creditors: (1) the Resource Envelope (defined below) available to 

satisfy HTA creditor obligations; (2) outstanding creditor obligations; and (3) priorities for the 

distribution of the Resource Envelope to service HTA’s obligations. 

The “Effective Date” of the analysis is June 30, 2022. The percentage recovery is calculated as 

the present value of the total amount expected to be paid to creditors over the entire period of 

the analysis as a proportion of the total outstanding principal and unpaid interest as of the HTA 

Title III petition date of May 21, 2017 (the “Petition Date”). Based on guidance from the 

FOMB’s financial advisors, the analysis assumes an annual discount rate of 5% as reasonable 

for the calculation of the present value of future principal and interest payments.

This document consists of two sections. The first section provides an overview of HTA’s 

resources available for debt service and outstanding creditor obligations. The second section

outlines the distribution of available resources across all HTA’s financial obligations and 

estimates the range of recoveries available to HTA creditors under different scenarios. 

I. RESOURCE ENVELOPE AND OUTSTANDING CREDITOR OBLIGATIONS

1) Resource Envelope

The total amount of resources available to pay creditor claims constitutes HTA’s resource 

envelope (the “Resource Envelope”). The Resource Envelope is the sum of (A) starting cash 

available for debt service and (B) surplus generated by HTA over FY23–51 (see details below).

A. Starting cash available for debt service: Based on guidance from FOMB’s legal and 

financial advisors, the starting cash available for debt service as of the Effective Date of the 

analysis is defined as: Cash in HTA’s Bondholder Reserve Accounts (defined below) plus any 

excess of HTA’s Unrestricted Cash (defined below) over HTA’s recommended minimum cash 

balance. 

The balances for these types of cash are projected as follows:

• Cash in HTA’s Bondholder Reserve Accounts: The “Bondholder Reserve Accounts” 

are the funds held at the Bank of New York Mellon as a collateral for HTA bondholders 

under resolutions No. 68-18 (“1968 Resolution”) and No. 98-06 (“1998 Resolution”). 

Based on data provided by FOMB’s legal and financial advisors, the Bondholder 

Reserve Accounts are assumed to have no value as of the Effective Date of this analysis, 

as any such funds in those accounts are paid to HTA Bondholders pursuant to that 

certain Second Amended and Restated Stipulation and Agreed Order Regarding the 

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Disputed Funds in the HTA Bond Service Accounts, Redemption Accounts and Reserve 

Accounts [Case No. 17-bk-3567-LTS, ECF No. 1228] (the “Stipulation”). 

• Unrestricted Cash: HTA holds funds that do not have legal restrictions on their use

(the “Unrestricted Cash”). Specifically, Unrestricted Cash does not include: (a) funds 

held on behalf of third parties in custodial or trust accounts;3 (b) funds whose use is 

restricted by a secured interest or court orders; and (c) earmarked funds received from 

the federal government for specific purposes and/or restricted by federal law or 

regulation. Based on data provided by FOMB’s financial advisors and liquidity 

projections provided by HTA, Unrestricted Cash is projected to be $160 million as of 

the Effective Date of the analysis.

• Minimum cash balance: This analysis contemplates HTA will maintain a minimum 

cash balance to meet its working capital needs. Based on an analysis provided by the 

FOMB, the required minimum cash balance for HTA was estimated to be between $98 

million and $107 million. For the purposes of this analysis, the midpoint ($102.5

million) is used as an estimate of minimum cash balance required for HTA as of the 

Effective Date of the analysis.

The starting cash available for debt service is estimated to be $58 million as of the Effective 

Date of the analysis. It consists of the sum of Unrestricted Cash less an assumption for 

minimum cash balance. 

B. Surplus generated by HTA: 

HTA’s annual surplus is a function of revenues less expenses. HTA revenues include: 

• Toll fare and fine revenues from roads specified in the 1968 Resolution and 1998 

Resolution (“four pledged toll roads”)4

• Operating revenues from other sources(e.g., revenue shares from other toll roads,5 fares 

from Tren Urbano and its feeder buses for as long as Tren Urbano is operated by HTA, 

ancillary revenues from activities such as property rentals, truck weighing and toll tag 

sales)

• Appropriations and grants from the Commonwealth, the Federal Highways 

Administration, the Federal Emergency Management Agency, and the Federal Transit 

Administration 

HTA expenses include: 

• Payroll, including salaries, retirement costs and related benefits 

• Transit costs, which includes costs generated by transit assets, such as Tren Urbano

(passenger train system) and feeder bus system

• Operating Right of Way (“ROW”) costs and litigation reserve deposits 

• Toll highway administration costs and other operating expenses6

• Hard7 and soft8 highway construction costs to maintain the existing road system

• Transit capital expenditures to maintain the existing transit system 

 3 Includes but is not limited to prepaid toll revenue collected but not yet earned by HTA 

4 Four pledged toll roads are: PR-20, PR-52, PR-53 and PR-66 

5 Other toll roads include: PR-5, PR-22 (incl. Dynamic Toll Lanes), PR-17, PR-199 

6 Other operating expenses include professional fees, rents, administrative costs, and others

7 Costs associated with physical construction

8 Costs associated with activities that do not involve physical construction

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• Other capital expenditures, such as emergency repair costs, toll optimization costs, local 

construction costs, capital ROW costs, and other construction program expenses9

For all the items above, this analysis uses projections from the 2022 HTA Certified Fiscal Plan, 

although certain projections are modified to reflect the dismissal of HTA’s Title III case and 

the lack of a Plan of Adjustment (“PoA”) for HTA. Based on guidance from FOMB’s legal 

advisors, the FOMB is assumed to continue to exist because the requirements for its dissolution 

as defined by PROMESA would not be met if the Title III case is dismissed, and HTA would 

continue to incur professional fees through FY32 related to ongoing litigation and stakeholder 

engagement. As outlined in Appendix 1, relative to the amounts identified in the 2022 HTA 

Certified Fiscal Plan, legal professional fees are assumed to be 20% higher in FY23 and 

continue at that level, growing in line with inflation through FY32. Non-legal professional fees 

related to ongoing litigation and stakeholder engagement are assumed to decrease by 50% 

relative to the amount identified in the 2022 HTA Certified Fiscal Plan in FY23 and continue 

at that level, growing in line with inflation through FY32.

To establish an estimated likely surplus range, this analysis also takes into account a number 

of risks resulting from financial instability and political uncertainty (e.g., challenges in the 

enactment of new legislation in the aftermath of HTA Title III case dismissal, elimination of 

fare increases, etc.) that may impact implementation of fiscal measures in the Fiscal Plan, if a 

PoA is not confirmed.

The higher end of the likely surplus range assumes the following adjustments with respect to 

fiscal measures in the 2022 HTA Certified Fiscal Plan: 

• Non-implementation of measures that would require legislative authorization, such as 

changes in the HTA Board of Directors and fine price modifications (inflation-based 

increases, tiered fines), due to challenges in the enactment of new legislation in the 

aftermath of Title III case dismissal

• Elimination of fare increases that would catch up with historical inflation in FY22–24

The lower end of the likely surplus range additionally assumes the following adjustments with 

respect to fiscal measures (in addition to the adjustments described above): 

• Non-implementation of ancillary revenue improvements and transit enhancements, 

which would require coordinated actions across various stakeholders 

• Lack of Tren Urbano contract reassessments and healthcare cost reductions, which 

would generate surplus for debt service if they occurred

• Elimination of any fare increases above any increases needed to cover deficits before 

debt service in the later years of the HTA Certified Fiscal Plan 

After accounting for these adjustments, the resulting range for cumulative HTA surplus over 

FY23–51 is estimated to be $667 million to $3,610 million, of which $650 to $3,570 million is

from HTA’s four pledged toll roads and $17 to $40 million is from other sources.

2) Outstanding obligations

This analysis considers the following classes of claims and associated balances based on 

information provided by FOMB’s legal and financial advisors: 

 9 Other construction program expenses include security costs, equipment rentals, travel costs

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• HTA Bonds:10 As of the Petition Date, the total amount of principal and interest owed 

was $4,159 million and $79 million, respectively. Based on guidance from FOMB’s 

legal and financial advisors, owed principal is expected to decrease to $3,897 million 

as of the Effective Date of the analysis as a result of contemplated payments to HTA 

bondholders pursuant to the Stipulation. Interest is projected to be $1,253 million as of 

the Effective Date of the analysis, which includes accrued and unpaid interest from the 

Petition Date through the Effective Date in the amount of $1,174 million.

• Government Development Bank (GDB) loans: As of the Petition Date, the total 

amount of principal and interest owed to GDB was $1,734 million and $416 million,

respectively. Based on guidance from FOMB’s legal and financial advisors, owed 

principal is projected to stay the same and owed interest is projected to be $948 million

as of the Effective Date of the analysis, which includes accrued and unpaid interest 

from the Petition Date through the Effective Date in the amount of $532 million.

• Unsecured Claims: As described in Appendix 1, total unsecured claims of $491

million comprised of (i) $255 million in HTA general unsecured claims (excluding 

eminent domain and federal claims), (ii) $42 million in eminent domain claims, (iii) 

$21 million in federal claims, and (iv) $173 million with respect to a loan from the 

Commonwealth to HTA.

The analysis excludes bonds issued to finance the construction of the Teodoro Moscoso Bridge.

Those bonds are paid directly by the concessionaire and are neither currently in default nor 

anticipated to be in default in the future. 

II. DISTRIBUTION OF AVAILABLE RESOURCES ACROSS OUTSTANDING 

OBLIGATIONS 

The distribution of resources available to pay creditor obligations follows a distribution

waterfall (described below), and leads to a range of recoveries where the higher end is driven 

by the higher end surplus assumptions and the lower end is driven by the lower end surplus 

assumptions, as described above. This section provides (1) an estimated likely range of 

recoveries, as well as (2) estimated creditor recoveries under alternative scenarios based on the 

litigation risks described in Appendix 1. 

1) Estimated likely range of recoveries

The estimated likely range of recoveries is calculated based on the cumulative HTA surplus 

range and legal assumptions outlined in Appendix 1 (including the Main Assumptions where 

applicable). Specifically, it is assumed HTA Bondholders do not have a validly perfected 

security interest in revenues earned by HTA’s four pledged toll roads. In the absence of a 

validly perfected security interest in such toll fare and fine revenues, operating and capital 

expenses would be paid before HTA Bondholder debt is serviced. 

Funds available for debt service: 

• Starting cash available for debt service: $58 million

• Cumulative HTA surplus from the four pledged toll roads over FY23–51: $650

million to $3,570 million – after payment of all operating and capital expenses

 10 Including 1968 bonds, 1998 bonds, subordinated 1998 bonds, and subordinated 2003 bonds 

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• Cumulative HTA surplus from other sources11 over FY23–51: $17 million to $40 

million – after payment of all operating and capital expenses

Funds available for debt service would be distributed in the order of priority outlined in 

Appendix 1 (see Exhibit 1 below for more details). For the claims considered in this analysis, 

obligations with the same level of priority would receive a pro rata allocation of resources in a 

given year up to the amount owed in that year. However, total recovery as a percent of 

outstanding debt may differ between debt with the same level of priority but different maturity 

schedules.

Exhibit 1: Distribution waterfall12

Aggregate recoveries (i.e., total recoveries for all creditors assuming HTA’s Title III case is

dismissed and all claims were enforced under non-bankruptcy law) would be $706 million to 

$1,847 million.13 This would represent an implied aggregate recovery rate of 11% to 28%.14

Recoveries would differ between different debt classes. Exhibit 2 shows the estimated likely 

range of recoveries for each class of claims.

 11 Including non-toll (e.g., electronic toll device sales and truck weighing, property sales and rentals, etc.) and transit (e.g., 

Tren Urbano, Metrobus)

12 Following legal guidance outlined in Appendix 1

13 The amount refers to the present value (as of the Effective Date) of future debt payments using an annual 5% discount 

rate

14 Recovery percentage is estimated as the present value (as of the Effective Date) of total debt paid over the full period of 

analysis as a proportion of the total principal outstanding and unpaid interest as of the Petition Date.

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Exhibit 2: Estimated likely range of recoveries

 

2) Alternative Scenarios based on litigation risks identified in Appendix 1

A. Alternative Scenario 1: On the basis of the litigation risks presented in Appendix 1, 

Alternative Scenario 1 assumes HTA Bondholders have a validly perfected security interest in 

all toll fares and fines from HTA’s four pledged toll roads. Under the 1968 Resolution and 

1998 Resolution, HTA Bondholders have a gross pledge over the toll revenues of these roads, 

meaning HTA is contractually required to service its bond debt obligations before using these 

revenues to pay any operating or capital expenses of HTA. However, Alternative Scenario 1 

also assumes a court would enable HTA to use toll revenues to cover HTA operating and capital

expenses before debt service to the extent necessary to prevent an interruption in vital public 

services. 

Therefore, in this scenario, funds available to satisfy creditor obligations would be distributed

in the following order outlined in Exhibit 3 (see Appendix 1 for more details).

Exhibit 3: Distribution waterfall considered in Alternative Scenario 1

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Under Alternative Scenario 1, the estimated aggregate range of recoveries is between 11% and

28%.15 Exhibit 5 shows the estimated likely range of recoveries for each class of claims.

B. Alternative Scenarios 2 and 3: Alternative Scenarios 2 and 3 also assume HTA 

Bondholders have a validly perfected security interest in toll revenues from HTA’s four 

pledged toll roads as specified in the 1968 Resolution and 1998 Resolution. However, these 

scenarios assume a court would enforce the contractual gross pledge of HTA Bondholders over 

toll revenues from these roads and would not permit HTA to use these revenues to cover its 

expenses before servicing its debt. Although there are conceivably a number of potential 

outcomes, this analysis offers 2 possible scenarios. 

Under Alternative Scenarios 2 and 3, the funds available for debt service would be: 

• Starting cash available for debt service: $58 million 

• Cumulative HTA surplus from the four pledged toll roads over FY23–51: $5,051 

million to $5,258 million – before payment of operating and capital expenses 

• Cumulative HTA surplus from other sources over FY23–51: $0 to $40 million after 

payment of all operating and capital expenses

Therefore, funds available to satisfy creditor obligations under Alternative Scenarios 2 and 3 

would be distributed in the following order outlined in Exhibit 4 (see Appendix 1 for more 

details). 

Under Alternative Scenarios 2 and 3, HTA would not have enough funds after debt service to 

cover its operating and capital expenses. The analysis also assumes HTA would be unlikely to 

further increase any revenues or decrease any costs within these scenarios. For example, the 

analysis recognizes HTA may have limited incentives to roll out any type of fare increases if 

the majority or all of the toll fares were to be exclusively dedicated to debt service rather than 

HTA’s own costs. Thus, the analysis assumes no implementation of fare increases under 

Alternative Scenarios 2 and 3. 

 

15 Recovery percentage is estimated as the present value (as of the Effective Date) of total debt paid over the full period of 

analysis as a proportion of the total principal outstanding and unpaid interest as of the Petition Date. 

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The 1968 Resolution and 1998 Resolution indicate that HTA has entered into an agreement 

with the Secretary of Public Works pursuant to which the Secretary of Public Works agreed to 

use general funds of the Commonwealth “which are made available to him” to pay for the 

maintenance, reparation, and operation of all traffic facilities financed by HTA. Therefore, the 

1968 Resolution and 1998 Resolution do not imply an independent legal obligation for the 

Commonwealth to finance HTA’s operating and capital costs.

Hence, the analysis assumes two alternative scenarios for the treatment of HTA’s costs:

• Alternative Scenario 2: The Commonwealth agrees to fund all deficits not associated 

with the four pledged toll roads to support Puerto Rico’s transport system. The 

Commonwealth also agrees to fund toll road capital expenditures to prevent the 

deterioration of conditions on major roads of the island. HTA Bondholders allow funds 

to be spent on operating costs of the four pledged toll roads, to ensure the continued 

operation of toll plazas and sustain recoveries over time (thus voluntarily reducing their

short-term recoveries), but do not cover any capital expenses.

• Alternative Scenario 3: The Commonwealth agrees to fund all deficits not associated 

with the four pledged toll roads and does not agree to fund toll road capital expenditures. 

HTA Bondholders allow funds to be spent on both operating and capital expenses of 

the four pledged toll roads, to ensure the continued operation of toll plazas and sustain 

recoveries over time, thus voluntarily reducing their short-term recoveries.

Overall, the creditor recoveries under Alternative Scenario 2 would range from $1,769 million 

to $1,854 million,16 which would represent an implied aggregate recovery rate of 26% to 

28%.17 Creditor recoveries under Alternative Scenario 3 would range from $1,045 million to 

$1,941 million, which would represent an implied aggregate recovery rate of 16% to 29%. 

Recoveries would differ between different debt classes. Exhibit 5 shows the estimated likely 

range of recoveries for each class of claims for all the Alternative Scenarios 1–3.

 16 The amount refers to the present value (as of the Effective Date) of future debt payments using an annual 5% discount rate

17 Recovery percentage is estimated as the present value (as of the Effective Date) of total debt paid over the full period of 

analysis as a proportion of the total principal outstanding and unpaid interest as of the Petition Date.

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Exhibit 5: Range of recoveries by debt class under Alternative Scenarios 1-3

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Appendix 1

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HTA Title III Plan

Best Interests Test Analysis – Assumptions

Question Assumption

1. To which assets and revenues will the HTA

1968 Bonds and HTA 1998 Bonds be entitled 

to recover from?

ASSUMPTION 1 [MAIN ASSUMPTION]: The Allocable Revenue statutes pursuant 

to which the Commonwealth transferred collections of certain fees and taxes are 

preempted by PROMESA; accordingly, the HTA 1968 Bonds and HTA 1998 Bonds 

shall not be entitled to recover therefrom. ECF No. 19813 (the “Confirmation Order”), 

Exhibit K (preempting Act 9 approved August 12, 1982; 9 L.P.R.A. § 2021 [motor 

vehicle license fees]; 13 L.P.R.A. § 31751(a)(1). [gas oil, diesel oil and petroleum 

products.]; and 13 L.P.R.A. § 31751(a)(3). [cigarette tax]); see also Confirmation Order, 

Exhibit K, n.9 (“Any statute providing for an appropriation not included in the budget 

certified by the FOMB is preempted.”); Confirmation Order, Article LXXXIX, ¶ 89.3 

(“Preemption of Laws” – generally approving preemption of provisions of 

Commonwealth laws inconsistent with PROMESA).

Outside of Title III, holders of the HTA 1968 Bonds and 1998 Bonds will be entitled to 

recover from the funds on deposit in the Bond Revenue Fund, Bond Reserve Fund, Debt 

Service Fund, Bond Sinking Fund, and Bond Redemption Fund Sinking Fund (the “Bond 

Sinking Funds”) held by the fiscal agent, in which they have a security interest. 

Additionally, while the Bondholders are contractually entitled to have certain toll and 

fine revenues specified in the Resolution deposited in the Bond Sinking Funds, they will 

share pari passu with other unsecured creditors to those revenues, including the 

GDB/HTA Loans, whose claims are included in the ratable calculations, but whose 

ratable recoveries will be allocated to the Bondholders until such bonds are paid in full 

(see assumption in row 2). The HTA 1968 Bonds and HTA 1998 Bonds ratable 

recoveries will be from only those revenues to which they are contractually entitled.

BASIS: The Bondholders have validly perfected security interests in the accounts

specified by the HTA Bond resolutions, which accounts are for the benefit of the HTA 

1968 Bonds and HTA 1998 Bonds, as so designated. Additionally, the Bondholders still 

have a contractual right to compel HTA to deposit the toll and fine revenues specified in 

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Question Assumption

the Resolution in the Bond Sinking Funds independent of whether their security interest 

attaches thereto. However, such contractual right is an unsecured obligation of HTA

pari passu to the rights of all other creditors of HTA with respect to HTA’s payment

obligations. Further, the bonds will recover only from those revenues to which they have 

a contractual entitlement.

ASSUMPTION 2 [LITIGATION RISK]: The HTA 1968 Bonds have priority with 

respect to toll and fine revenues pledged under the 1968 Resolution, and the HTA 1998 

Bonds have priority with respect to toll and fine revenues pledged under the 1998 

Resolution.

BASIS: A court may find that the Bondholders have a security interest in the toll and 

fine revenues collected by HTA in addition the funds deposited in bank accounts held by 

Bank of New York Mellon.

2. What is the priority of payments with respect 

to each of the various revenue sources for 

holders of HTA debt?

ASSUMPTION: Under the bond documents, bondholders can only recover from 

revenues pledged to them, which includes revenues from toll roads managed by HTA

and fines pledged under the 1968 Resolution and 1998 Resolution. Other sources of 

revenues, to the extent unrestricted (such as certain federal funds, Commonwealth 

appropriations, and revenues from concession toll roads such as the Metropistas Toll 

Roads and the Teodoro Moscoso Bridge) are available to all creditors other than the 

HTA Bondholders, whose claims are nonrecourse.

HTA 1968 Bonds

The HTA 1968 Bonds have priority with respect to the toll and fine revenues pledged 

under the 1968 Resolution.

Debt service on the 1968 HTA Bonds and the funding of the Reserve Account pursuant 

to the 1968 Resolution must be satisfied (i.e., an amount equal to the lesser of (x) the 

maximum annual principal and interest payment on the 1968 HTA Bonds and (y) 10% of 

the original principal amount of each series of bonds outstanding) before any payments 

are made on the 1998 Bonds. The HTA 1968 Bonds may not be accelerated.

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Question Assumption

HTA 1998 Bonds

The HTA 1998 Bonds will receive (i) excess revenues pledged under the 1968

Resolution provided the HTA 1968 Bonds have been paid all amounts due to date, and 

(ii) revenues from toll roads managed by HTA pledged to the holders of HTA 1998 

Bonds (and not pledged to holders of HTA 1968 Bonds). The HTA 1998 Bonds may not 

be accelerated.

GDB/HTA Loans (held by the DRA Parties)

In accordance with the Title III Court’s determination that the GDB/HTA Loans are 

subordinated to the HTA Bondholders, such loans will receive the excess revenues 

pledged under the 1968 Resolution and 1998 Resolution, only after the HTA 1998 Bonds 

and HTA 1998 Bonds are paid in full. The GDB/HTA Loans’ ratable share of toll roads 

and fines are instead allocated to the HTA Bondholders, until such bondholders are paid 

in full.

The GDB/HTA Loans may also recover from the general revenues or other resources of 

HTA, which are not available to HTA Bondholders.

Teodoro Moscoso Bridge Bonds

Revenues generated by the Teodoro Moscoso Bridge are pledged to pay the Teodoro 

Moscoso bonds. In any given year, the revenues from this bridge are first used to pay all 

expenses incurred by the bridge, including payments to Autopistas for monthly expenses. 

Then, Teodoro Moscoso bondholders are paid with any remaining surplus. Finally, any 

remaining resources are transferred to HTA and are available for HTA’s general use.

BASIS: The underlying debt documents set forth the respective rights of the various

HTA debtholders, which rights are summarized above.

3. Should interest on debt that remained unpaid 

during the stay accrue additional interest?

ASSUMPTION: Assume that in years where full payment of matured debt is not made, 

subsequent payments are first credited against interest, and then against principal.

i. Interest on HTA debt during stay: Pursuant to PROMESA 

§ 303, interest continues to accrue at the contract rate during the 

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Question Assumption

automatic stay, unless the underlying contract provides for 

default interest, in which case the latter should be used. The 

HTA bond and loan documents do not provide for default 

interest or interest on interest.

ii. Interest on unsecured claims during stay: Assume no interest 

accrues on debt having no interest rate.

iii. Interest on unpaid debt: Assume any unpaid debt accrues 

interest according to the weighted average coupon rate as of 

2022 (provided by Citi).

iv. Interest on interest: No. Puerto Rico law permits the payment 

of interest on overdue interest under certain circumstances, such 

as if it was expressly agreed by the parties, although there is no 

statutory provision for interest on interest. However, the HTA 

Bonds do not provide for interest on overdue interest.

4. If all other resources available to HTA are 

insufficient to maintain HTA’s solvency, may

HTA use toll and fine revenues to pay 

operating expenditures and capital 

expenditures before debt service?

ASSUMPTION 1 [MAIN ASSUMPTION]: Yes. HTA will be permitted to use toll 

and fine revenues to cover necessary operating expenses and capital expenses of HTA, 

both toll and non-toll related, prior to payment of debt service.

BASIS: In accordance with the Puerto Rico Supreme Court’s opinion in Librotex, Inc.,

et al. v. Aqueduct and Sewer Authority of Puerto Rico, et al., (Case No. CE-94-395, July 

14, 1995), a court may approve the use of tolls and fine revenues to pay operating 

expenses and capital expenses. Librotex holds that a judgment creditor cannot get an 

attachment of revenues if to do so would “result in the interruption” of a vital public 

service Accordingly, if, without maintaining the entire transportation system, HTA’s 

operations could be materially harmed, including the success of toll roads, non-toll roads, 

and the Tren Urbano, a court is likely to find the public interest overrides any contractual 

obligations to the contrary.

ASSUMPTION 2 [LITIGATION RISK]: No. Commonwealth courts may find that, if 

the Bondholders have a perfected security interest in toll and fine revenues, such

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Question Assumption

revenues may not be used to pay operating expenses and capital expenses before debt 

service is paid in full. If necessary, the Commonwealth could pay all necessary 

operating expenses of HTA which HTA is not otherwise able to pay itself.

BASIS: The Resolutions for the 1968 HTA Bonds and the 1998 HTA Bonds provide the 

Bondholders have a gross pledge of the toll revenues, which provides debt service is paid 

prior to operating expenses and capital expenses.

5. Are eminent domain claims for just 

compensation senior to, or pari passu with, 

general unsecured claims?

ASSUMPTION: Eminent domain claims are pari passu with general unsecured claims.

BASIS: Eminent domain claims, even if not dischargeable in Title III, have rights no

payment priority over unsecured claims.

6. Will HTA have restricted cash accounts not 

available for debt service? What minimum 

cash balance must HTA retain for operating 

expenses and capital expenses? 

ASSUMPTION: Yes. HTA will retain minimum cash balances for operating expenses 

and capital expenses. Any additional cash shall be used to pay unsecured claims and the 

GDB/HTA Loans pari passu.

BASIS: To maintain the safe operation and maintenance of HTA, HTA will be required 

to maintain minimum liquidity for both operating expenses and capital expenses. The 

minimum cash requirement for HTA is estimated to be $102.5 million based on a cash 

analysis provided by the Oversight Board. 

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DEBT STACK1

2. Operating Cost 

• Projected $18,988 million in annual expenses over FY23–51, per the 2022 HTA Fiscal Plan. 

3. Adjustments from Fiscal Plan

• HTA’s legal fees are expected to increase by 20% in FY23 and grow in line with inflation 

from FY24 through FY32, assuming extensive litigation needs without Title III protections or 

a plan of adjustment. Non-legal professional fees fall by 50% once the Title III case is 

dismissed, and grow by inflation through FY32. All professional fees for the creditors 

committee are assumed to be zero after the effective date of this analysis (June 30, 2022).

4. HTA Debt as of Effective Date of the HTA BIT Analysis 

• HTA Bond Claims: $3,897 million in principal and $1,253 million in interest

• GDB HTA Loans (held by the DRA Parties): $1,734 million in principal and $948 million in 

interest 

5. Other unsecured claims 

• $254,886,894 (excluding eminent domain claims and federal claims)

• $41,875,695 in eminent domain claims, with each claim to be paid upon entry of a final 

order with respect thereto as described in the Herriman Declaration

• $20,788,696 million in federal claims, to be paid in equal installments over forty years from 

and after the third anniversary of the Effective Date of this analysis

• $173 million CW/HTA loan (no acceleration; payable according to the amortization 

schedule)

 1

 The financial information contained herein relies on information available in most recent publicly available financial 

statements and, in certain cases, information received from the Oversight Board’s advisors and the Commonwealth 

advisors. The legal advisors take no position as to the accuracy of the financial information provided herein.

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Exhibit B

Redline

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Analysis of Creditor Recoveries should the Title III Case be Dismissed for Creditors of the 

Puerto Rico Highways and Transportation Authority (“HTA”)

This analysis assesses the recoveries available to creditors of HTA on the basis of available 

remedies under non-bankruptcy laws, including the Constitution of the Commonwealth of 

Puerto Rico. Pursuant to section 314(b)(6) of PROMESA,1 a proposed Plan of Adjustment 

should be “feasible and in the best interest of creditors, which requires the court to consider 

whether available remedies under non-bankruptcy law and the constitution of the territory 

would result in greater recoveries for the creditors than provided by the plan.” This analysis 

provides an estimated range of recoveries available to creditors if the stay of debt enforcement 

is terminated, no Plan of Adjustment for HTA is confirmed, and the Title III case for HTA is 

dismissed.

The analysis was prepared by McKinsey & Company Puerto Rico Consulting, Inc. (“McKinsey 

& Company”). Proskauer Rose LLP and O’Neill & Borges LLC,2 legal advisors to the 

Financial Oversight and Management Board for Puerto Rico (“FOMB”), provided McKinsey 

& Company with a set of legal assumptions used in the preparation of this analysis. The legal 

assumptions are included in Appendix 1 of this document. FOMB’s financial advisors provided 

McKinsey & Company with financial information used in the preparation of this analysis. Such 

financial information included schedules detailing estimates of outstanding bond debt, 

estimates of cash balances, and other financial data. McKinsey & Company also relied on data 

published by or directly provided by HTA and the Government of Puerto Rico and their 

respective advisors. 

McKinsey & Company has accepted as true, accurate, and appropriate all the legal and 

financial information and assumptions provided by Proskauer Rose LLP, O’Neill & Borges 

LLC, other FOMB advisors, and the Government of Puerto Rico, HTA, and their respective

advisors. McKinsey & Company has not independently verified any of the information or 

assumptions received from Proskauer Rose LLP, O’Neill & Borges LLC, other FOMB 

advisors, the Government of Puerto Rico, HTA, and their respective advisors, nor does it take 

any independent position with respect to this information and these assumptions.

The assumptions, projections, and estimates used in the analysis are inherently subject to 

business, economic, and political uncertainties, and, therefore, are subject to change. McKinsey 

& Company makes no representation or warranty that the actual recoveries available to or 

potentially realized by creditors on the basis of available remedies under any laws, including 

the Puerto Rico Constitution, would or would not approximate the estimates and assumptions 

represented in the analysis, and actual results may vary materially from those shown herein. 

McKinsey & Company does, however, represent that the recovery range identified herein is its 

best estimate of such recoveries based on the information provided to it.

 1 PROMESA means the Puerto Rico Oversight, Management and Economic Stability Act.

2 Proskauer Rose LLP and O’Neill & Borges LLC are sometimes referred to as “FOMB’s legal advisors” in this analysis.

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OVERALL METHODOLOGY

Following guidance provided by FOMB’s legal advisors, the analysis assumes the PROMESA 

Title III case for HTA is dismissed and PROMESA Titles I and II continue to apply. Therefore, 

the analysis assumes the automatic stay of debt enforcement terminates, and the FOMB 

remains in place and will continue to certify HTA Fiscal Plans, and enforce implementation of 

budgets, subject to any debt enforcement in excess of the budget the Puerto Rico courts would 

order. The analysis further assumes creditors would pursue legal action against HTA to recover 

the amounts they claim they are owed. 

This analysis is based on the revenue and expenditure projections as contained in the 2022

HTA Certified Fiscal Plan. The analysis relies on three components to calculate potential 

recoveries available to HTA creditors: (1) the Resource Envelope (defined below) available to 

satisfy HTA creditor obligations; (2) outstanding creditor obligations; and (3) priorities for the 

distribution of the Resource Envelope to service HTA’s obligations. 

The “Effective Date” of the analysis is June 30, 2022. The percentage recovery is calculated as 

the present value of the total amount expected to be paid to creditors over the entire period of 

the analysis as a proportion of the total outstanding principal and unpaid interest as of the HTA 

Title III petition date of May 21, 2017 (the “Petition Date”). Based on guidance from the 

FOMB’s financial advisors, the analysis assumes an annual discount rate of 5% as reasonable 

for the calculation of the present value of future principal and interest payments.

This document consists of two sections. The first section provides an overview of HTA’s 

resources available for debt service and outstanding creditor obligations. The second section

outlines the distribution of available resources across all HTA’s financial obligations and 

estimates the range of recoveries available to HTA creditors under different scenarios. 

I. RESOURCE ENVELOPE AND OUTSTANDING CREDITOR OBLIGATIONS

1) Resource Envelope

The total amount of resources available to pay creditor claims constitutes HTA’s resource 

envelope (the “Resource Envelope”). The Resource Envelope is the sum of (A) starting cash 

available for debt service and (B) surplus generated by HTA over FY23–51 (see details below).

A. Starting cash available for debt service: Based on guidance from FOMB’s legal and 

financial advisors, the starting cash available for debt service as of the Effective Date of the 

analysis is defined as: Cash in HTA’s Bondholder Reserve Accounts (defined below) plus any 

excess of HTA’s Unrestricted Cash (defined below) over HTA’s recommended minimum cash 

balance. 

The balances for these types of cash are projected as follows:

• Cash in HTA’s Bondholder Reserve Accounts: The “Bondholder Reserve Accounts” 

are the funds held at the Bank of New York Mellon as a collateral for HTA bondholders 

under resolutions No. 68-18 (“1968 Resolution”) and No. 98-06 (“1998 Resolution”). 

Based on data provided by FOMB’s legal and financial advisors, the Bondholder 

Reserve Accounts are assumed to have no value as of the Effective Date of this analysis, 

as any such funds in those accounts are paid to HTA Bondholders pursuant to that 

certain Second Amended and Restated Stipulation and Agreed Order Regarding the 

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Disputed Funds in the HTA Bond Service Accounts, Redemption Accounts and Reserve 

Accounts [Case No. 17-bk-3567-LTS, ECF No. 1228__] (the “Stipulation”). 

• Unrestricted Cash: HTA holds funds that do not have legal restrictions on their use

(the “Unrestricted Cash”). Specifically, Unrestricted Cash does not include: (a) funds 

held on behalf of third parties in custodial or trust accounts;3 (b) funds whose use is 

restricted by a secured interest or court orders; and (c) earmarked funds received from 

the federal government for specific purposes and/or restricted by federal law or 

regulation. Based on data provided by FOMB’s financial advisors and liquidity 

projections provided by HTA, Unrestricted Cash is projected to be $113 160 million as 

of the Effective Date of the analysis.

• Minimum cash balance: This analysis contemplates HTA will maintain a minimum 

cash balance to meet its working capital needs. We understand an analysis of the 

advisable amount of minimum cash HTA should retain is in progress by FOMB’s 

advisors but has not yet been completed. Based on guidance from FOMB’s advisorsan 

analysis provided by the FOMB,, this analysis assumes, on a preliminary basis, that the 

amount of the recommendedrequired minimum cash balance for HTA was estimated to 

be between $98 million and $107 million. For the purposes of this analysis, the 

midpoint ($102.5 million) is used as an estimate of minimum cash balance required for 

HTA as of the Effective Date of the analysis.will be in excess of the amount of available 

Unrestricted Cash as of the Effective Date of this analysis.

The starting cash available for debt service is estimated to be $58 million as of the Effective 

Date of the analysis. It consists of the sum of Unrestricted Cash less an assumption for 

minimum cash balance.As of the Effective Date of the analysis, Unrestricted Cash is expected 

to be less than the recommended minimum cash balance. Therefore, no Unrestricted Cash is 

expected to be available for debt service as of the Effective Date of the analysis. 

B. Surplus generated by HTA: 

HTA’s annual surplus is a function of revenues less expenses. HTA revenues include: 

• Toll fare and fine revenues from roads specified in the 1968 Resolution and 1998 

Resolution (“four pledged toll roads”)4

• Operating revenues from other sources(e.g., revenue shares from other toll roads,5 fares 

from Tren Urbano and its feeder buses for as long as Tren Urbano is operated by HTA, 

ancillary revenues from activities such as property rentals, truck weighing and toll tag 

sales)

• Appropriations and grants from the Commonwealth, the Federal Highways 

Administration, the Federal Emergency Management Agency, and the Federal Transit 

Administration 

HTA expenses include: 

• Payroll, including salaries, retirement costs and related benefits 

• Transit costs, which includes costs generated by transit assets, such as Tren Urbano 

(passenger train system) and feeder bus system

• Operating Right of Way (“ROW”) costs and litigation reserve deposits 

 3 Includes but is not limited to prepaid toll revenue collected but not yet earned by HTA 

4 Four pledged toll roads are: PR-20, PR-52, PR-53 and PR-66 

5 Other toll roads include: PR-5, PR-22 (incl. Dynamic Toll Lanes), PR-17, PR-199 

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• Toll highway administration costs and other operating expenses6

• Hard7 and soft8 highway construction costs to maintain the existing road system

• Transit capital expenditures to maintain the existing transit system 

• Other capital expenditures, such as emergency repair costs, toll optimization costs, local 

construction costs, capital ROW costs, and other construction program expenses9

For all the items above, this analysis uses projections from the 2022 HTA Certified Fiscal Plan, 

although certain projections are modified to reflect the dismissal of HTA’s Title III case and 

the lack of a Plan of Adjustment (“PoA”) for HTA. Based on guidance from FOMB’s legal 

advisors, the FOMB is assumed to continue to exist because the requirements for its dissolution 

as defined by PROMESA would not be met if the Title III case is dismissed, and HTA would 

continue to incur professional fees through FY32 related to ongoing litigation and stakeholder 

engagement. As outlined in Appendix 1, relative to the amounts identified in the 2022 HTA 

Certified Fiscal Plan, legal professional fees are assumed to be 20% higher in FY23 and 

continue at that level, growing in line with inflation through FY32. Non-legal professional fees 

related to ongoing litigation and stakeholder engagement are assumed to decrease by 50% 

relative to the amount identified in the 2022 HTA Certified Fiscal Plan in FY23 and continue 

at that level, growing in line with inflation through FY32.

To establish an estimated likely surplus range, this analysis also takes into account a number 

of risks resulting from financial instability and political uncertainty (e.g., challenges in the 

enactment of new legislation in the aftermath of HTA Title III case dismissal, elimination of 

fare increases, etc.) that may impact implementation of fiscal measures in the Fiscal Plan, if a 

PoA is not confirmed.

The higher end of the likely surplus range assumes the following adjustments with respect to 

fiscal measures in the 2022 HTA Certified Fiscal Plan: 

• Non-implementation of measures that would require legislative authorization, such as 

changes in the HTA Board of Directors and fine price modifications (inflation-based 

increases, tiered fines), due to challenges in the enactment of new legislation in the 

aftermath of Title III case dismissal

• Elimination of fare increases that would catch up with historical inflation in FY22–24

The lower end of the likely surplus range additionally assumes the following adjustments with 

respect to fiscal measures (in addition to the adjustments described above): 

• Non-implementation of ancillary revenue improvements and transit enhancements, 

which would require coordinated actions across various stakeholders 

• Lack of Tren Urbano contract reassessments and healthcare cost reductions, which 

would generate surplus for debt service if they occurred

• Elimination of any fare increases above any increases needed to cover deficits before 

debt service in the later years of the HTA Certified Fiscal Plan 

 6 Other operating expenses include professional fees, rents, administrative costs, and others

7 Costs associated with physical construction

8 Costs associated with activities that do not involve physical construction

9 Other construction program expenses include security costs, equipment rentals, travel costs

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After accounting for these adjustments, the resulting range for cumulative HTA surplus over 

FY23–51 is estimated to be $667 million to $3,610 million, of which $650 to $3,570 million is

from HTA’s four pledged toll roads and $17 to $40 million is from other sources.

2) Outstanding obligations

This analysis considers the following classes of claims and associated balances based on 

information provided by FOMB’s legal and financial advisors: 

• HTA Bonds:10 As of the Petition Date, the total amount of principal and interest owed 

was $4,159 million and $79 million, respectively. Based on guidance from FOMB’s 

legal and financial advisors, owed principal is expected to decrease to $3,897 million 

as of the Effective Date of the analysis as a result of contemplated payments to HTA 

bondholders pursuant to the Stipulation. Interest is projected to be $1,253 million as of 

the Effective Date of the analysis, which includes accrued and unpaid interest from the 

Petition Date through the Effective Date in the amount of $1,174 million.

• Government Development Bank (GDB) loans: As of the Petition Date, the total 

amount of principal and interest owed to GDB was $1,734 million and $416 million,

respectively. Based on guidance from FOMB’s legal and financial advisors, owed 

principal is projected to stay the same and owed interest is projected to be $948 million

as of the Effective Date of the analysis, which includes accrued and unpaid interest 

from the Petition Date through the Effective Date in the amount of $532 million.

• Unsecured Unsecured Claims: As described in Appendix 1, there are three categories 

of unsecured claims as of the Effective Date of the analysis. Ttotal unsecured claims of 

$491513 million comprised of (i) $256 255 million in HTA general unsecured claims

(excluding eminent domain and federal claims), (ii) $84 42 million in eminent 

domain/inverse condemnation claims, (iii) $21 million in federal claims, and (iv) $173

million with respect to a loan from the Commonwealth to HTA.

The analysis excludes bonds issued to finance the construction of the Teodoro Moscoso Bridge.

Those bonds are paid directly by the concessionaire and are neither currently in default nor 

anticipated to be in default in the future. 

II. DISTRIBUTION OF AVAILABLE RESOURCES ACROSS OUTSTANDING 

OBLIGATIONS 

The distribution of resources available to pay creditor obligations follows a distribution

waterfall (described below), and leads to a range of recoveries where the higher end is driven 

by the higher end surplus assumptions and the lower end is driven by the lower end surplus 

assumptions, as described above. This section provides (1) an estimated likely range of 

recoveries, as well as (2) estimated creditor recoveries under alternative scenarios based on the 

litigation risks described in Appendix 1. 

1) Estimated likely range of recoveries

The estimated likely range of recoveries is calculated based on the cumulative HTA surplus 

range and legal assumptions outlined in Appendix 1 (including the Main Assumptions where 

applicable). Specifically, it is assumed HTA Bondholders do not have a validly perfected 

 10 Including 1968 bonds, 1998 bonds, subordinated 1998 bonds, and subordinated 2003 bonds 

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security interest in revenues earned by HTA’s four pledged toll roads. In the absence of a 

validly perfected security interest in such toll fare and fine revenues, operating and capital 

expenses would be paid before HTA Bondholder debt is serviced. 

Funds available for debt service: 

• Starting cash available for debt service: $58 million

• Cumulative HTA surplus from the four pledged toll roads over FY23–51: $650

million to $3,570 million – after payment of all operating and capital expenses

• Cumulative HTA surplus from other sources11 over FY23–51: $17 million to $40 

million – after payment of all operating and capital expenses

Funds available for debt service would be distributed in the order of priority outlined in 

Appendix 1 (see Exhibit 1 below for more details). For the claims considered in this analysis, 

obligations with the same level of priority would receive a pro rata allocation of resources in a 

given year up to the amount owed in that year. However, total recovery as a percent of 

outstanding debt may differ between debt with the same level of priority but different maturity 

schedules.

Exhibit 1: Distribution waterfall12

Aggregate recoveries (i.e., total recoveries for all creditors assuming HTA’s Title III case is

dismissed and all claims were enforced under non-bankruptcy law) would be $706648 million

to $1,789 847 million.13 This would represent an implied aggregate recovery rate of 1011% to 

2728%.14 Recoveries would differ between different debt classes. Exhibit 2 shows the 

estimated likely range of recoveries for each class of claims.

 11 Including non-toll (e.g., electronic toll device sales and truck weighing, property sales and rentals, etc.) and transit (e.g., 

Tren Urbano, Metrobus)

12 Following legal guidance outlined in Appendix 1

13 The amount refers to the present value (as of the Effective Date) of future debt payments using an annual 5% discount 

rate

14 Recovery percentage is estimated as the present value (as of the Effective Date) of total debt paid over the full period of 

analysis as a proportion of the total principal outstanding and unpaid interest as of the Petition Date.

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Exhibit 2: Estimated likely range of recoveries

 

2) Alternative Scenarios based on litigation risks identified in Appendix 1

A. Alternative Scenario 1: On the basis of the litigation risks presented in Appendix 1, 

Alternative Scenario 1 assumes HTA Bondholders have a validly perfected security interest in 

all toll fares and fines from HTA’s four pledged toll roads. Under the 1968 Resolution and 

1998 Resolution, HTA Bondholders have a gross pledge over the toll revenues of these roads, 

meaning HTA is contractually required to service its bond debt obligations before using these 

revenues to pay any operating or capital expenses of HTA. However, Alternative Scenario 1 

also assumes a court would enable HTA to use toll revenues to cover HTA operating and capital

expenses before debt service to the extent necessary to prevent an interruption in vital public 

services. 

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Therefore, in this scenario, funds available to satisfy creditor obligations would be distributed

in the following order outlined in Exhibit 3 (see Appendix 1 for more details).

Exhibit 3: Distribution waterfall considered in Alternative Scenario 1

Under Alternative Scenario 1, the estimated aggregate range of recoveries is between 1011% 

and 2728%.15 Exhibit 5 shows the estimated likely range of recoveries for each class of claims.

B. Alternative Scenarios 2 and 3: Alternative Scenarios 2 and 3 also assume HTA 

Bondholders have a validly perfected security interest in toll revenues from HTA’s four 

pledged toll roads as specified in the 1968 Resolution and 1998 Resolution. However, these 

scenarios assume a court would enforce the contractual gross pledge of HTA Bondholders over 

toll revenues from these roads and would not permit HTA to use these revenues to cover its 

expenses before servicing its debt. Although there are conceivably a number of potential 

outcomes, this analysis offers 2 possible scenarios.

Under Alternative Scenarios 2 and 3, the funds available for debt service would be: 

• Starting cash available for debt service: $58 million

• Cumulative HTA surplus from the four pledged toll roads over FY23–51: $5,051

million to $5,258 million – before payment of operating and capital expenses 

• Cumulative HTA surplus from other sources over FY23–51: $0 to $40 million after 

payment of all operating and capital expenses

•

Therefore, funds available to satisfy creditor obligations under Alternative Scenarios 2 and 3 

would be distributed in the following order outlined in Exhibit 4 (see Appendix 1 for more 

details).

 15 Recovery percentage is estimated as the present value (as of the Effective Date) of total debt paid over the full period of 

analysis as a proportion of the total principal outstanding and unpaid interest as of the Petition Date.

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Under Alternative Scenarios 2 and 3, HTA would not have enough funds after debt service to 

cover its operating and capital expenses. The analysis also assumes HTA would be unlikely to 

further increase any revenues or decrease any costs within these scenarios. For example, the 

analysis recognizes HTA may have limited incentives to roll out any type of fare increases if 

the majority or all of the toll fares were to be exclusively dedicated to debt service rather than 

HTA’s own costs. Thus, the analysis assumes no implementation of fare increases under 

Alternative Scenarios 2 and 3. 

The 1968 Resolution and 1998 Resolution indicate that HTA has entered into an agreement 

with the Secretary of Public Works pursuant to which the Secretary of Public Works agreed to 

use general funds of the Commonwealth “which are made available to him” to pay for the 

maintenance, reparation, and operation of all traffic facilities financed by HTA. Therefore, the 

1968 Resolution and 1998 Resolution do not imply an independent legal obligation for the 

Commonwealth to finance HTA’s operating and capital costs. 

Hence, the analysis assumes two alternative scenarios for the treatment of HTA’s costs:

• Alternative Scenario 2: The Commonwealth agrees to fund all deficits not associated 

with the four pledged toll roads to support Puerto Rico’s transport system. The 

Commonwealth also agrees to fund toll road capital expenditures, excluding the four 

pledged toll roads, to prevent the deterioration of conditions on major roads of the 

island. HTA Bondholders allow funds to be spent on operating costs of the four pledged 

toll roads, to ensure the continued operation of toll plazas and sustain recoveries over 

time (thus voluntarily reducing their short-term recoveries), but do not cover any capital 

expenses. 

• Alternative Scenario 3: The Commonwealth agrees to fund all deficits not associated 

with the four pledged toll roads but and does not agree to fund toll road capital 

expenditures. HTA Bondholders allow funds to be spent on both operating and capital 

expenses of the four pledged toll roads, to ensure the continued operation of toll plazas

and sustain recoveries over time, thus voluntarily reducing their short-term recoveries. 

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Overall, the creditor recoveries under Alternative Scenario 2 would range from $1,76912

million to $1,854796 million,16 which would represent an implied aggregate recovery rate of 

2526% to 278%.17 Creditor recoveries under Alternative Scenario 3 would range from 

$1,045988 million to $1,894183 million, which would represent an implied aggregate recovery 

rate of 165% to 2829%. 

Recoveries would differ between different debt classes. Exhibit 5 shows the estimated likely 

range of recoveries for each class of claims for all the Alternative Scenarios 1–3.

 16 The amount refers to the present value (as of the Effective Date) of future debt payments using an annual 5% discount rate

17 Recovery percentage is estimated as the present value (as of the Effective Date) of total debt paid over the full period of 

analysis as a proportion of the total principal outstanding and unpaid interest as of the Petition Date.

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Appendix 1

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HTA Title III Plan

Best Interests Test Analysis – Assumptions

Question Assumption

1. To which assets and revenues will the HTA

1968 Bonds and HTA 1998 Bonds be entitled

to recover from?

ASSUMPTION 1 [MAIN ASSUMPTION]: The Allocable Revenue statutes pursuant

to which the Commonwealth transferred collections of certain fees and taxes are

preempted by PROMESA; accordingly, the HTA 1968 Bonds and HTA 1998 Bonds

shall not be entitled to recover therefrom. ECF No. 19813 (the “Confirmation Order”),

Exhibit K (preempting

Act 9 approved

August 12, 1982; 9

L.

P

.R.A. § 2021 [motor vehicle license fees]; 13

L.

P

.R.A. § 31751(a)(1). [gas oil, diesel oil and petroleum products.]; and 13

L.

P

.R.A. § 31751(a)(3). [cigarette tax]); see also Confirmation Order, Exhibit K, n.9

(“Any statute providing for an appropriation not included in the budget certified by the

FOMB is preempted.”); Confirmation

Orde

r

,

Article LXXXIX, ¶ 89.3 (“Preemption of Laws” – generally approving preemption of

provisions of Commonwealth laws inconsistent with PROMESA).

Outside of Title III, holders of the HTA 1968 Bonds and 1998 Bonds will be entitled to

recover from the funds on deposit in the Bond Revenue Fund, Bond Reserve Fund, Debt

Service Fund, Bond Sinking Fund, and Bond Redemption Fund Sinking Fund (the “Bond

Sinking Funds”) held by the fiscal agent, in which they have a security interest.

1

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Question Assumption

Additionally, while the Bondholders are contractually entitled to have certain toll and

fine revenues specified in the Resolution deposited in the Bond Sinking Funds, they will

share pari passu with other unsecured creditors to those revenues, including the

GDB/HTA Loans, whose claims are included in the ratable calculations, but whose

ratable recoveries will be allocated to the Bondholders until such bonds are paid in full

(see assumption in row 2). The HTA 1968 Bonds and HTA 1998 Bonds ratable

recoveries will be from only those revenues to which they are contractually entitled.

BASIS: The Bondholders have validly perfected security interests in the accounts

specified by the HTA Bond resolutions, which accounts are for the benefit of the HTA

1968 Bonds and HTA 1998 Bonds, as so designated. Additionally, the Bondholders still

have a contractual right to compel HTA to deposit the toll and fine revenues specified in

the Resolution in the Bond Sinking Funds independent of whether their security interest

attaches thereto. However, such contractual right is an unsecured obligation of HTA

pari passu to the rights of all other creditors of HTA with respect to HTA’s payment

obligations. Further, the bonds will recover only from those revenues to which they

have a contractual entitlement.

ASSUMPTION 2 [LITIGATION RISK]: The HTA 1968 Bonds have priority with

respect to toll and fine revenues pledged under the 1968 Resolution, and the HTA 1998

Bonds have priority with respect to toll and fine revenues pledged under the 1998

Resolution.

BASIS: A court may find that the Bondholders have a security interest in the toll and

fine revenues collected by HTA in addition the funds deposited in bank accounts held by

Bank of New York Mellon.

2. What is the priority of payments with respect

to each of the various revenue sources for

holders of HTA debt?

ASSUMPTION: Under the bond documents, bondholders can only recover from

revenues pledged to them, which includes revenues from toll roads managed by HTA

and fines pledged under the 1968 Resolution and 1998 Resolution. Other sources of

revenues, to the extent unrestricted (such as certain federal funds, Commonwealth

appropriations, and revenues from concession toll roads such as the Metropistas Toll

Roads and the Teodoro Moscoso Bridge) are available to all creditors other than the

2

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Question Assumption

HTA Bondholders, whose claims are nonrecourse.

HTA 1968 Bonds

The HTA 1968 Bonds have priority with respect to the toll and fine revenues pledged

under the 1968 Resolution.

Debt service on the 1968 HTA Bonds and the funding of the Reserve Account pursuant

to the 1968 Resolution must be satisfied (i.e., an amount equal to the lesser of (x) the

maximum annual principal and interest payment on the 1968 HTA Bonds and (y) 10%

of the original principal amount of each series of bonds outstanding) before any

payments are made on the 1998 Bonds. The HTA 1968 Bonds may not be accelerated.

HTA 1998 Bonds

The HTA 1998 Bonds will receive (i) excess revenues pledged under the 1968

Resolution provided the HTA 1968 Bonds have been paid all amounts due to date, and

(ii) revenues from toll roads managed by HTA pledged to the holders of HTA 1998

Bonds (and not pledged to holders of HTA 1968 Bonds). The HTA 1998 Bonds may not

be accelerated.

GDB/HTA Loans (held by the DRA Parties)

In accordance with the Title III Court’s determination that the GDB/HTA Loans are

subordinated to the HTA Bondholders, such loans will receive the excess revenues

pledged under the 1968 Resolution and 1998 Resolution, only after the HTA 1998

Bonds and HTA 1998 Bonds are paid in full. The GDB/HTA Loans’ ratable share of toll

roads and fines are instead allocated to the HTA Bondholders, until such bondholders

are paid in full.

The GDB/HTA Loans may also recover from the general revenues or other resources of

HTA, which are not available to HTA Bondholders.

Teodoro Moscoso Bridge Bonds

Revenues generated by the Teodoro Moscoso Bridge are pledged to pay the Teodoro

Moscoso bonds. In any given year, the revenues from this bridge are first used to pay all

3

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Question Assumption

expenses incurred by the bridge, including payments to Autopistas for monthly

expenses. Then, Teodoro Moscoso bondholders are paid with any remaining surplus.

Finally, any remaining resources are transferred to HTA and are available for HTA’s

general use.

BASIS: The underlying debt documents set forth the respective rights of the various

HTA debtholders, which rights are summarized above.

3. Should interest on debt that remained unpaid

during the stay accrue additional interest?

ASSUMPTION: Assume that in years where full payment of matured debt is not made,

subsequent payments are first credited against interest, and then against principal.

i. Interest on HTA debt during stay: Pursuant to PROMESA §

303, interest continues to accrue at the contract rate during

the automatic stay, unless the underlying contract provides

for default interest, in which case the latter should be used.

The HTA bond and loan documents do not provide for default

interest or interest on interest.

ii. Interest on unsecured claims during stay: Assume no

interest accrues on debt having no interest rate.

iii. Interest on unpaid debt: Assume any unpaid debt accrues

interest according to the weighted average coupon rate as of

2022 (provided by Citi).

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iv. Interest on interest: No. Puerto Rico law permits the

payment of interest on overdue interest under certain

circumstances, such as if it was expressly agreed by the parties,

although there is no statutory provision for interest on interest.

However, the HTA Bonds do not provide for interest on

overdue interest.

4. If all other resources available to HTA are

insufficient to maintain HTA’s solvency, may

HTA use toll and fine revenues to pay

operating expenditures and capital

expenditures before debt service?

ASSUMPTION 1 [MAIN ASSUMPTION]: Yes. HTA will be permitted to use toll

and fine revenues to cover necessary operating expenses and capital expenses of HTA,

both toll and non-toll related, prior to payment of debt service.

BASIS: In accordance with the Puerto Rico Supreme Court’s opinion in Librotex, Inc.,

et al. v. Aqueduct and Sewer Authority of Puerto Rico, et al., (Case No. CE-94-395, July

14, 1995), a court may approve the use of tolls and fine revenues to pay operating

expenses and capital expenses. Librotex holds that a judgment creditor cannot get an

attachment of revenues if to do so would “result in the interruption” of a vital public

service Accordingly, if, without maintaining the entire transportation system, HTA’s

operations could be materially harmed, including the success of toll roads, non-toll

roads, and the Tren Urbano, a court is likely to find the public interest overrides any

contractual obligations to the contrary.

ASSUMPTION 2 [LITIGATION RISK]: No. Commonwealth courts may find that, if

the Bondholders have a perfected security interest in toll and fine revenues, such

revenues may not be used to pay operating expenses and capital expenses before debt

service is paid in full. If necessary, the Commonwealth could pay all necessary

operating expenses of HTA which HTA is not otherwise able to pay itself.

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Question Assumption

BASIS: The Resolutions for the 1968 HTA Bonds and the 1998 HTA Bonds provide

the Bondholders have a gross pledge of the toll revenues, which provides debt service is

paid prior to operating expenses and capital expenses.

5. Are eminent domain claims for just

compensation senior to, or pari passu with,

general unsecured claims?

ASSUMPTION: Eminent domain claims are pari passu with general unsecured claims.

BASIS: Eminent domain claims, even if not dischargeable in Title III, have rights no

payment priority over unsecured claims.

6. Will HTA have restricted cash accounts not

available for debt service? What minimum

cash balance must HTA retain for operating

expenses and capital expenses?

ASSUMPTION: Yes. HTA will retain minimum cash balances for operating expenses

and capital expenses. Any additional cash shall be used to pay unsecured claims and the 

GDB/HTA Loans pari passu.

BASIS: To maintain the safe operation and maintenance of HTA, HTA will be required

to maintain minimum liquidity for both operating expenses and capital expenses. The 

minimum cash requirement for HTA is estimated to be $102.5 million based on a cash 

analysis provided by the Oversight Board. 

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DEBT STACK1

2. Operating Cost

 Projected $18,988 million in annual expenses over FY23–51, per the 2022 HTA Fiscal

Plan.

3. Adjustments from Fiscal Plan

 HTA’s legal fees are expected to increase by 20% in FY23 and grow in line with inflation

from FY24 through FY32, assuming extensive litigation needs without Title III protections

or a plan of adjustment. Non-legal professional fees fall by 50% once the Title III case is

dismissed, and grow by inflation through FY32. All professional fees for the creditors

committee are assumed to be zero after the effective date of this analysis (June 30, 2022).

4. HTA Debt as of Effective Date of the HTA BIT Analysis

 HTA Bond Claims: $3,897 million in principal and $1,253 million in interest

 GDB HTA Loans (held by the DRA Parties): $1,734 million in principal and $948 million

in interest

5. Other unsecured claims

 $255,972,641254,886,894 (excluding eminent domain claims and federal claims)

 $83,687,66341,875,695 in eminent domain claims, with each claim to be paid upon entry of 

a final order with respect thereto as described in the Herriman Declaration

 $20,788,696 million in federal claims, to be paid in equal installments over forty years from 

and after the third anniversary of the Effective Date of this analysis

 $173 million CW/HTA loan (no acceleration; payable according to the amortization

schedule)

1

 The financial information contained herein relies on information available in most recent publicly available 

financial statements and, in certain cases, information received from the Oversight Board’s advisors and the 

Commonwealth advisors. The legal advisors take no position as to the accuracy of the financial information 

provided herein.

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