UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

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

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.1

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

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

PUERTO RICO ELECTRIC POWER AUTHORITY 

(“PREPA”), 

 Debtor.

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

PROMESA

Title III

No. 17 BK 4780-LTS

Re: Docket No. ____

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 

 

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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) 

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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 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”);2and 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,

 

Puerto Rico Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17 BK 4780 (LTS)) (Last Four Digits of 

Federal Tax ID: 3747).

2

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

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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 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.

 

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

Credit Agreement and such other necessary documents, which shall be consistent with the terms of 

this Order and on substantially similar terms as the terms of the Credit Agreement, (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:

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 (unless an 

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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; provided, however, that the foregoing shall not prevent the 

Court from ordering, or a party from requesting, a more extended briefing schedule and a hearing 

relating to such submission, nor shall it prejudice any party’s right to object to any such extension 

request. 

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

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

assignment of any rights under the Credit Documents, such change or addition 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; provided, however, that 

the foregoing shall not prevent the Court from ordering, or a party from requesting, a more 

extended briefing schedule and a hearing relating to such submission, nor shall it prejudice any 

party’s right to object to any such extension request.

SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIM

AND CURRENT EXPENSE CLASSIFICATION

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 obligations arising under the 

Facility, having priority over any and all other claims against the Debtor, now existing or hereafter 

arising, of any kind whatsoever, including, without limitation, all 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 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 Carve Out 

(defined below). Except as otherwise provided in this Order, the Superpriority Claim shall be 

senior in all respects to any and all superpriority administrative expense claims allowed in this 

Title III Case. 

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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 are treated as “Current Expenses” under the Trust Agreement. Nothing in this 

Order (a) prejudices the right of any party to argue (on the basis of this paragraph 9 or otherwise) 

that a pre-petition claim is or is not a Current Expense or (b) constitutes a determination of such 

issue.

CARVE OUT; RESTRICTIONS ON USE OF FUNDS

10. 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.

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11. Prohibition on Granting of Liens or Additional Superpriority Claims. No valid 

liens,Neither claims, interests or priority status nor interests shall be secured by liens or granted 

superpriority status equal to or senior to the Superpriority Claim, other than the Carve Out and

claims secured by valid, perfected liens existing as of the date of entry of this Order, 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

12. 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 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. 

13. 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. Except as expressly stated herein such as without 

limitation the grant of superpriority status and validity of claims under the instant financing, this 

Order shall not be interpreted to limit any party’s rights and, for the avoidance of doubt, shall not 

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be interpreted to prejudice the rights and interests, if any, of holders and/or insurers of PREPA’s 

power revenue bonds.

14. 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.

15. 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. Any written amendment, consent, waiver, or modification to the Credit 

Agreement shall be publicly filed with the Court through an informative motion.

16. 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.

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17. 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. 

18. 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.

19. 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.

20. 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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