UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

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In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.1

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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.

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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”); 

 

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

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

identification number, as applicable, are the (i) Commonwealth of Puerto Rico (Bankruptcy Case No. 17 BK 

3283-LTS) (Last Four Digits of Federal Tax ID: 3481); (ii) Puerto Rico Sales Tax Financing Corporation 

(“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) (Last Four Digits of Federal Tax ID: 8474); (iii) 

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

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

Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) (Last Four Digits of Federal Tax 

ID: 3808); and (v) Puerto Rico Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17 BK 4780 (LTS)) 

(Last Four Digits of Federal Tax ID: 3747).

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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 

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”);

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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,

 

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 

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

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 

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

(unless an alternative treatment is agreed to by the Lender); and (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. Neither 

claims 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, 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 be interpreted to prejudice the rights and interests, if any, of holders and/or 

insurers of PREPA’s power revenue bonds.

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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.

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 

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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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