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

case number due to software limitations and the last four (4) digits of each Debtor’s federal tax identification number, 

as applicable, are the (i) Commonwealth of Puerto Rico (Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of 

Federal Tax ID: 3481); (ii) Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 

3284-LTS) (Last Four Digits of Federal Tax ID: 8474); (iii) Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax 

ID: 9686); (iv) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 

3567-LTS) (Last Four Digits of Federal Tax ID: 3808); and (v) Puerto Rico Electric Power Authority (“PREPA”) 

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

UNITED STATES DISTRICT COURT

DISTRICT OF PUERTO RICO

x

In re: PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

THE FINANCIAL OVERSIGHT AND

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of

THE COMMONWEALTH OF PUERTO RICO, et al.

Debtors.1

x

In re:

THE FINANCIAL OVERSIGHT AND

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of

PROMESA

Title III

No. 17 BK 4780-LTS

Re: Docket No. ____

PUERTO RICO ELECTRIC POWER AUTHORITY

(“PREPA”),

Debtor.

x

ORDER (A) AUTHORIZING

DEBTOR PUERTO RICO ELECTRIC POWER AUTHORITY TO

OBTAIN POSTPETITION FINANCING, (B) PROVIDING SUPERPRIORITY

ADMINISTRATIVE EXPENSE CLAIMS, AND (C) GRANTING RELATED RELIEF

Upon the Urgent Joint Motion of the Financial Oversight and Management Board for

Puerto Rico and the Puerto Rico Fiscal Agency and Financial Advisory Authority for Entry of

Interim and Final Orders (a) Authorizing Postpetition Secured Financing, (b) Granting Priming

Liens and Providing Superpriority Administrative Expense Claims, (c) Modifying the Automatic

Stay, (d) Scheduling a Final Hearing, and (e) Granting Related Relief (the “Urgent Motion”); and

the Court having indicated at the hearing held before the Court on February 15, 2018 (the

“Hearing”) it would consider granting the Urgent Motion upon modification of the relief

requested therein upon the terms as specified by the Court; and upon the Oversight Board’s and

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Exhibit B - Redline of Trustee Revised Proposed Financing Order Page 1 of 11
AAFAF’s Urgent Application and Notice of Revised Proposed $300 Million Loan from

Commonwealth to PREPA submitting a revised financing proposal for a $300 million credit

facility as an unsecured superpriority administrative expense claim (the “Urgent Joint

Application”);2 and the Court having found it has subject matter jurisdiction over this matter

pursuant to section 306(a) of PROMESA; and it appearing that venue in this district is proper

pursuant to section 307(a) of PROMESA; and upon objections having been filed to the Urgent

Motion; and the Court having found the relief requested in the Urgent Joint Application to the

extent granted herein is necessary for the best interests of impacted stakeholders; and the Court

having found the Debtor provided adequate and appropriate notice of the Urgent Motion and the

Urgent Joint Application under the circumstances and that no other or further notice is required;

and the Court having reviewed the Urgent Motion and the Urgent Joint Application and having

heard the statements of counsel in support of the Urgent Motion at the Hearing; and the Court

having considered the Urgent Joint Application and having determined that it is in accordance

with the Court’s decision setting forth the conditions for the Court’s approval of a $300 million

credit facility as an unsecured superpriority administrative expense claim; and the Court having

determined that there is just cause for the relief granted herein; and upon the record herein, after

due deliberation thereon, the Court having found that good and sufficient cause exists for the

granting of the relief as set forth herein,

IT IS HEREBY FOUND AND DETERMINED THAT:3

A. Purpose and Necessity of Financing. The Debtor requires the financing under the

facility described in the Urgent Joint Application, subject to and consistent with the terms set

forth in the Postpetition Credit Agreement substantially in the form attached to the Urgent Joint

Application as Exhibit A (as amended or modified, the “Credit Agreement”), to finance

operating expenses that (i) constitute Eligible Uses and (ii) are included in the initial 13-week

cash flow budget filed as Exhibit 1 to Docket No. 722 and any subsequent 13-week cash flow

budget submitted by the Debtor to the Lender as provided in the Credit Agreement and approved

2 Capitalized terms not otherwise defined herein shall have the meanings given to them in the Credit Documents

3 Findings of fact shall be construed as conclusions of law, and conclusions of law shall be construed as findings of 

fact, as applicable, pursuant to Bankruptcy Rule 7052.

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by the Lender and the Oversight Board (collectively, the “Budget”). The Debtor is unable to

obtain adequate unsecured credit allowable as an administrative expense under section 503 of the

Bankruptcy Code. A loan facility in the amount of $300 million on the terms proposed by the

Lender (the “Facility”) is not available to the Debtor without granting the Lender a superpriority

administrative claim pursuant to section 364(c)(1) of the Bankruptcy Code as provided in this

Order and the Credit Documents (defined below). After considering all alternatives, the Debtor

has exercised its permissible judgment as a governmental instrumentality in determining the

Facility represents the best financing it has been offered at this time.

B. Good Cause Shown. Good and sufficient cause has been shown for entry of this

Order. The ability of the Debtor to obtain sufficient working capital and liquidity under the

Credit Documents is vital to the Debtor, its creditors, and its customers. The liquidity to be

provided under the Credit Documents will enable the Debtor to continue to operate and preserve

the value of the Debtor’s assets. Accordingly, this Order is in the best interests of the Debtor and

its creditors.

C. Relief Essential; Good Cause. The authorization granted herein to enter into the

Credit Agreement and such other necessary documents consistent with the terms of this Order

and on substantially similarthe same terms as the terms of the Credit Agreement and this Order

(such documents, as amended or modified as permitted by this Order, together with the Credit

Agreement, the “Credit Documents”) and to obtain funds under the Facility is necessary,

essential, and appropriate for continued operations, and for the management, maintenance and

preservation of the Debtor’s assets and property as it will, among other things, provide the

Debtor with the necessary liquidity to continue to operate and preserve the value of its assets.

Good cause has been shown for the relief requested in the Urgent Joint Application to the extent

granted in this Order. Based upon the foregoing findings, acknowledgements, and conclusions,

and upon the record made before this Court at the Hearing, and good and sufficient cause

appearing therefor;

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:

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1. Disposition. The Urgent Joint Application is GRANTED to the extent set forth in

this Order.

AUTHORIZATION FOR FINANCING 

2. Authorization for Financing. The Debtor is hereby authorized to execute, perform

and incur the obligations arising under the Facility, subject to the terms of this Order and the Credit

Documents, in the aggregate principal amount of up to $300 million. From and after entry of this

Order, available advances shall be made in accordance with the Credit Documents and the Budget,

to the extent provided in the Credit Agreement, for the purpose of funding Eligible Uses.

3. Authority to Perform Under Necessary Documents. The Debtor is authorized and

directed to (i) perform all its obligations under the Credit Documents, and such other agreements

as may be required by the Credit Documents to give effect to the terms of the financing provided

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for therein and in this Order, and (ii) perform all acts required under the Credit Documents and

this Order.

4. Valid and Binding Obligations. All obligations under the Credit Documents shall

constitute valid and binding obligations of the Debtor in accordance with the terms of the Credit

Documents and the terms of this Order, and no obligation, payment, or transfer, under the Credit

Documents or this Order shall be stayed, restrained, voidable, or recoverable under PROMESA,

the Bankruptcy Code, or under any applicable law or subject to any avoidance, reduction, setoff,

offset, recharacterization, subordination (whether equitable, contractual, or otherwise),

counterclaims, cross-claims, defenses, or any other challenges under PROMESA, the Bankruptcy

Code, or any applicable law or regulation by any person or entity except as expressly provided

herein. For the avoidance of doubt, (i) the Court’s approval of the Facility from the Debtor’s

perspective and (ii) the factual findings made in this Order shall not in any way prejudice or

affect any rights or remedies that creditors of the Lender may assert in connection with the

Lender’s decision to enter into the Facility or the implementation thereof; provided, that the

Lender reserves all rights and defenses in connection therewith.

5. Termination Date. Notwithstanding anything in this Order to the contrary, the

Facility shall expire, and the loans made pursuant to this Order and the Credit Documents will

mature, and together with any other obligations accruing under the Credit Documents, will

become due and payable (unless such obligations become due and payable earlier pursuant to the

terms of the Credit Documents and this Order by way of acceleration or otherwise), on the

earliest of (in each case, the “Termination Date”): (i) the date on which all the Loans and other

obligations thereunder have been indefeasibly repaid in full in cash (and the Commitment has

been terminated); (ii) the effective date of a confirmed plan of adjustment in the Title III Case

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 (unless an alternative treatment is agreed to by the Lender); and (iii) the date of termination of the

Commitment and/or acceleration of any outstanding extensions of credit under the Facility

following the occurrence and during the continuance of an “Event of Default” (as defined in the

Credit Agreement).

6. Amendments, Consents, Waivers, and Modifications.

(a) Subject to the approval of the Oversight Board, the Debtor may enter into any

amendments, consents, waivers, or modifications to the Credit Documents, in accordance with

the terms thereof, without the need for further notice and hearing or any order of this Court;

provided, however, that to the extent any material amendment, material consent, material waiver

or material modification to the Credit Agreement or any other Credit Document, including

without limitation Sections 9-2, 4-13, 5-5, and 5-6 of the Credit Agreement, is approved by the

Oversight Board (for the avoidance of doubt, including any refinancing of the Facility), such

material amendment, material consent, material waiver or material modification or any other

material change (however accomplished) shall not become effective without further Court order,

which shall be submitted on presentment with notice to parties in interest in accordance with the

case management procedures then in effect in the Debtor’s Title III case. For the avoidance of

doubt, such material amendments, consents, material waivers, or material modifications subject

to this paragraph shall include any consent to the use of proceeds of the Facility to fund or

otherwise pay for any Ineligible Uses.

(b) In the event the Facility is funded through a Commonwealth Financing that results

in a material change to the economic terms of the Facility or any other transfer or assignment of

any rights under the Credit Documents, such shall not become effective without further Court

order, which shall be submitted on presentment with notice to parties in interest in accordance

with the case management procedures.

SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIM

AND CURRENT EXPENSE CLASSIFICATION 

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7. The Lender’s Superpriority Claim. The Lender is hereby granted an allowed

superpriority administrative expense claim (the “Superpriority Claim”) pursuant to section

364(c)(1) of the Bankruptcy Code in the Debtor’s Title III Case for all monetary obligations

arising under the Facility, having priority over any and all other claims against the Debtor, now

existing or hereafter arising, of any kind whatsoeverto the extent provided in Title III, including,

without limitation, all allowed administrative expenses of the kinds specified in or arising or

ordered, whether or not such expenses or claims may become secured by a judgment lien or other

non-consensual lien, levy or attachment, which allowed Superpriority Claim shall be considered

administrative expenses allowed under sections 503(b) and 507(a)(2) of the Bankruptcy Code, and

which Superpriority Claim shall, subject to the provisions of Title III, be payable from and have

recourse to all pre- and postpetition property of the Debtor and all proceeds thereof. The

Superpriority Claim shall be subject and subordinate in priority of payment only to the

administrative claims described in the Carve Out (defined below). Except as otherwise provided

in this Order, the Superpriority Claim shall be senior in all respects to any and all other

superpriority administrative expense claims allowed in this Title III Case.

8. Survival of Superpriority Claim. Except as otherwise provided herein, the

Superpriority Claim and other rights and remedies granted under this Order to the Lender shall

continue in this Title III Case and shall maintain their priority as provided in this Order until all

obligations arising under the Facility have been indefeasibly paid in full in cash or otherwise

satisfied, and any commitment of the Lender has been terminated in accordance with the Credit

Documents.

9. Current Expense Classification. “Eligible Uses” of the proceeds of the Loans

pursuant to this Order and the Credit Documents are limited to “Current Expenses” under the

Trust Agreement. As such, the Debtor’s repayment obligations to the Lender for amounts 

borrowed under the Facility shall be treated as “Current Expenses” under the Trust 

Agreement.CARVE OUT; RESTRICTIONS ON USE OF FUNDS 

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10. 9. Carve Out. The Superpriority Claim shall be subject and subordinate to the

Carve Out. “Carve Out” means the sum of: (i) to the extent allowed at any time, whether by

interim order, procedural order, or otherwise all unpaid fees, costs, and expenses (the

“Professional Fees”) incurred by persons or firms retained by or on behalf of the Debtor

(including professionals retained by AAFAF for which the Debtor is obligated to reimburse

AAFAF) (the “Debtor Professionals”), the Oversight Board (the “Oversight Board’s

Professionals”) and the Official Committee of Unsecured Creditors (the “Creditors’ Committee,”

together with the Oversight Board’s Professionals and the Debtor Professionals, the “Professional 

Persons”); and (ii) any state matching requirements of Federal grants and loans.

11. Repayment of Loans Under Facility. Prior to the Termination Date, the Debtor

shall be authorized and the directed to pay interest and to repay principal on the Loans made to it

under the Facility from its General Fund subject to (a) the limitations set forth in the Budget then

in effect; and (b) the payment of the other Eligible Expenses provided therein. On and after the

Termination Date the super-priority administrative expense claim shall be paid to the extent, and

in the priority, provided by Title III of PROMESA, including under any plan of debt adjustment

confirmed thereunder. 

12. 10. Prohibition on Granting of Liens or Additional Superpriority Claims.

NoWithout limiting the grant under the Trust Agreement, no liens, claims, interests or priority

status, other than the Carve Out, having a lien or administrative priority superior to, pari passu

with, that of the Superpriority Claim, shall be granted while any portion of the obligations arising

under the Facility remains outstanding, or any commitments of the Lender under the Credit

Documents remains in effect, without the prior written consent of the Lender.

MISCELLANEOUS

13. 11. Successors and Assigns. The Credit Documents and the provisions of this

Order shall be binding upon the Debtor and the Lender (and each of their respective successors

and assigns), and shall inure to the benefit of the Debtor and the Lender (and each of their

respective successors and assigns). The terms and provisions of this Order shall also be binding

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on all of the Debtor’s creditors and all other parties in interest; provided, however, the findings

and determinations set forth in this Order shall not be binding on the Court with respect to the

provisions contained in any future order approving additional financing except that the Lender

will be afforded the benefits and protections of this Order for all amounts owed under the

Facility.

14. 12. Reservation of Rights. Nothing herein shall alter any setoff rights under

applicable nonbankruptcy law of the Debtor, the Lender, or any other party, all of which setoff

rights, if any, are hereby reserved; provided, however, nothing in this Order authorizes any setoff

between prepetition and postpetition amounts owed. Other than as explicitly provided in this

Order, nothing in this Order or in the Credit Documents shall alter the rights, if any, of any

parties-in-interest under the Trust Agreement or applicable law.

15. 13. Binding Nature of Agreement. Each of the Credit Documents shall constitute

legal, valid, and binding obligations of the Debtor, enforceable in accordance with their terms.

Unless otherwise consented to in writing by the Oversight Board and the Lender, the rights,

remedies, powers, privileges, and priorities of the Lender provided for in this Order, the Credit

Documents, or otherwise shall not be modified, altered, or impaired in any manner by any

subsequent order (including a confirmation or sale order), by any plan of adjustment in this Title

III Case, by the dismissal of this Title III Case or in any subsequent case under PROMESA unless

and until the obligations arising under the Facility have first been indefeasibly paid in full in cash

and/or completely satisfied and any commitments of the Lender terminated in accordance with the

Credit Documents.

16. 14. Access to Additional Information. Article V of the Credit Agreement provides

specific information and reporting rights to certain creditors. The Debtor will consider reasonable

requests for additional information in good faith. The Debtor shall also make available the

proposed Budgets to Respondents, or their representatives, that have signed customary

non-disclosure agreement acceptable to the Debtor promptly after delivery to the Lender and the

Oversight Board.

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17. 15. No Effect on Payment of Administrative Priority Claims. Payment of

administrative priority claims will be satisfied in accordance with PROMESA. Payment of

expenses that are obligated by FEMA are permitted under the Credit Agreement and such

payments are not subject to the Facility's variance test.

18. 16. Priority of Terms. To the extent of any conflict between the express terms or

provisions of any Credit Documents and the terms of this Order, this Order shall govern. To the

extent any of the terms or provisions of the Credit Documents are deemed ambiguous, any

ambiguity will be resolved in a manner that renders the Credit Documents consistent with this

Order.

19. 17. Adequate Notice. The notice given by the Debtor of the Hearing was given in

accordance with Bankruptcy Rules 2002 and 4001 and Local Bankruptcy Rule 4001-2. Such

notice was good and sufficient under the particular circumstances and no other or further notice of

the request for the relief granted at the Hearing is required.

20. 18. Immediate Binding Effect; Entry of Order. This Order shall not be stayed and

shall be valid and fully effective immediately upon entry, notwithstanding the possible

application of Bankruptcy Rules 6004(h), 7062, and 9014, or otherwise, and the Clerk of the

Court is hereby directed to enter this Order on the Court’s docket in this Title III Case.

21. 19. Retention of Jurisdiction. This Court shall retain exclusive jurisdiction over

all matters pertaining to the implementation, interpretation, and enforcement of this Order.

Dated: _______________, 2018 ___________________________________

HONORABLE LAURA TAYLOR SWAIN

United States District Judge

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