Exhibit A

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Exhibit A Page 1 of 21
1 DAVID BROWNSTEIN

2 bondholders?

3 MS. SPILLANE: Objection to

4 form.

5 MR. MERVIS: Objection to

6 the form.

7 A You have to know how much

8 money you have available after that

9 settlement or litigation, if you don't

1 0 have a settlement, in order to find a

1 1 settlement with the bondholders.

1 2 Q Had the dispute between the

1 3 oversight board and the fuel line lenders

1 4 concerning the fuel line lenders'

1 5 asserted priority been resolved prior to

1 6 agreement to the 2019 RSA?

1 7 A I don't recall.

1 8 Q Are you aware of any

1 9 settlement between the oversight board

2 0 and the fuel line lenders, preceding the

2 1 agreement to the 2019 RSA?

2 2 A No. They were part of the

2 3 2019 RSA. So all of it was developed in

2 4 one package. But you had their

2 5 agreement. So you didn't have the

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Exhibit A Page 2 of 21
1 DAVID BROWNSTEIN

2 dispute issue to worry about, that they

3 were litigating, and they would take

4 money that belonged to the bondholders in

5 the RSA because then we'd have to cancel

6 the RSA.

7 Q And when you say they would

8 take money that belonged to the

9 bondholders, what do you mean by that?

1 0 A If they won the litigation

1 1 and were entitled to first cash flow,

1 2 were they entitled to 100 cents on the

1 3 dollar, 100 cents plus accruals or not.

1 4 And if they were, that would mean based

1 5 on what we at the time believed we could

1 6 afford to pay wouldn't have enough money

1 7 to pay the bondholders what we would have

1 8 agreed to if we had done them first

1 9 without knowing the results on the fuel

2 0 lines.

2 1 Q If the fuel line lenders in

2 2 the absence of a settlement were to

2 3 prevail in their priority litigation,

2 4 would that require PREPA to pay

2 5 additional sums in total creditor

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Exhibit A Page 3 of 21
1 DAVID BROWNSTEIN

2 recoveries?

3 MS. SPILLANE: Objection to

4 form.

5 A No. As I just said to you,

6 it would have required that we not offer

7 as much to the bondholders.

8 MR. MADDEN: Tab 4 of the

9 binder.

1 0 (The above-referred-to

1 1 document was marked as Exhibit 91 for

1 2 identification, as of this date.)

1 3 Q Mr. Brownstein, do you

1 4 recognize the agreement that begins on

1 5 page 5 of 32 of -- let me take a step

1 6 back.

1 7 MR. MADDEN: I didn't mark

1 8 this. We're going to mark as Exhibit

1 9 91 a document that is Exhibit M to

2 0 the disclosure statement, dated

2 1 March 1, 2023.

2 2 A Okay.

2 3 Q And so my question was going

2 4 to be, Mr. Brownstein, do you recognize

2 5 the agreement that begins on page 5 of 32

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Exhibit A Page 4 of 21
1 DAVID BROWNSTEIN

2 of the PDF that is Exhibit 91?

3 A Yes, sir.

4 Q And what is it?

5 A It's the plan support and

6 settlement agreement between the fuel

7 lines, the board and PREPA.

8 Q And were you involved in

9 negotiating this agreement?

1 0 A Yes.

1 1 Q And what was the nature of

1 2 your involvement?

1 3 A I'm not sure I understand

1 4 your question.

1 5 Q How did you participate in

1 6 the negotiations that led to this

1 7 agreement?

1 8 A Well, based on what the

1 9 board was comfortable doing, we

2 0 negotiated a settlement with the fuel

2 1 line lenders. And then we assisted

2 2 Proskauer, who worked with Wachtell as

2 3 fuel line lender counsel, and the advisor

2 4 to the fuel line lenders to paper the

2 5 agreement that would look like what our

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Exhibit A Page 5 of 21
1 DAVID BROWNSTEIN

2 priority; right?

3 A Correct.

4 Q And what do you anticipate

5 your testimony to be with respect to

6 those key benefits regarding the priority

7 of the fuel line lenders?

8 MR. MERVIS: Object to the

9 form. But you could answer.

1 0 A Again, as I said previously

1 1 today, the critical pieces, what we were

1 2 concerned about is since we have a

1 3 limited amount of funds available for

1 4 creditors, without knowing what the

1 5 amount is that we will be paying the fuel

1 6 lines, given we would be going into

1 7 litigation, we would either have to

1 8 reserve a significant amount of money for

1 9 the fuel lines until we knew, or we could

2 0 settle with them and, therefore, be able

2 1 to negotiate with the bondholders with

2 2 knowing what was the free cash flow

2 3 available for them.

2 4 Q Thank you.

2 5 Moving away from the

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Exhibit A Page 6 of 21
1 DAVID BROWNSTEIN

2 disclosure statement and moving towards

3 the fuel line lender settlement, under

4 that settlement, why are bondholders

5 entitled to interest accrual from

6 December 1, 2022 on the Series A Bonds?

7 MR. MERVIS: I object to the

8 form.

9 A Well, you're asking why the

1 0 fuel line lenders as owners of the Series

1 1 A Bonds are entitled to one year's

1 2 accrued interest.

1 3 Q Yes.

1 4 A Okay. And this is on the

1 5 new bonds so you understand; right? That

1 6 there's a deemed issuance date on the

1 7 bonds, built into our cash flows already

1 8 is the cost of that one year's accrual.

1 9 If the settlement takes longer than a

2 0 year, they no longer receive additional

2 1 accrual.

2 2 So the charge that you're

2 3 aware of that we're prepared to pay to

2 4 all creditors incorporates already, the

2 5 interest accrual from the deemed issuance

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Exhibit A Page 7 of 21
1 DAVID BROWNSTEIN

2 date. The reason for the deemed issuance

3 date is, as I think you know, the fuel

4 lines are one of several creditors, but

5 one who has settled with the board who

6 have entered into several RSAs with us;

7 okay? And those RSAs have been

8 terminated for various reasons. The

9 issue is in getting creditors to agree

1 0 today to move forward with an RSA with

1 1 us. They're looking to understand what

1 2 can keep the deal from closing and when

1 3 it can close and what the economic impact

1 4 to them of it not closing on that

1 5 schedule is.

1 6 So as part of the settlement

1 7 with National -- with the fuel line

1 8 lenders, we've agreed to give them a

1 9 deemed issuance date. And if the bonds

2 0 are issued in less than one year or one

2 1 year exactly, they will get accrued

2 2 interest on those bonds, on the new

2 3 bonds. If it's longer than one year, the

2 4 accrual stops. It's not dissimilar,

2 5 although it is different, from the

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Exhibit A Page 8 of 21
1 DAVID BROWNSTEIN

2 National agreement where National will

3 receive one cent on its pro rata share of

4 their bonds.

5 So let me try and help you

6 think about this. If there are 8 billion

7 of outstanding bonds, one cent on that

8 8 billion then divided by all the bonds,

9 multiplied by National's bonds is what

1 0 they'd be entitled to for up to 12

1 1 months, subject to approval of the

1 2 utility commission, PREB.

1 3 Q So you view this as interest

1 4 on new bonds and not post-petition

1 5 interest; is that fair?

1 6 A No. The difference, as I

1 7 said, is that the interest on -- for

1 8 National is one cent. It's not equal to

1 9 interest on the bonds, on the old bonds.

2 0 Q I'm still on the fuel line

2 1 lenders.

2 2 A I'm sorry. I apologize.

2 3 Yes. It's interest on the new bonds.

2 4 Q Now, staying with the fuel

2 5 line lenders, I mean you're not going to

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Exhibit A Page 9 of 21
1 DAVID BROWNSTEIN

2 dispute that they're receiving a higher

3 recovery than the general unsecured

4 creditors under the current proposed

5 plan, are you?

6 A I am not. They've settled,

7 and the unsecureds have not.

8 Q Is that the singular

9 justification for the difference in

1 0 treatment?

1 1 MR. MERVIS: Objection to

1 2 the form of the question.

1 3 THE WITNESS: So you want

1 4 him to re-ask it?

1 5 MR. MERVIS: No. If you

1 6 understand it, you can answer.

1 7 A No. But I'm telling you, so

1 8 they have a real settlement. And it was

1 9 negotiated. And we have a settlement

2 0 with them in National. We don't have a

2 1 settlement with the GUCs. I can't talk

2 2 about what has occurred with the GUCs in

2 3 terms of offers that have been made.

2 4 But, you know, that's the difference.

2 5 Q So is there any other reason

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Exhibit A Page 10 of 21
1 DAVID BROWNSTEIN

2 for the difference in the treatment,

3 other than the fact that one is a

4 settlement, and one hasn't been settled?

5 MR. MERVIS: Objection to

6 the form.

7 A Yes. Again, it was our

8 position that we have risk with the fuel

9 line lenders on priority. And we don't

1 0 believe we have that risk with you.

1 1 Q And that has to do with the

1 2 current expense?

1 3 A Yes.

1 4 Q Do you know if there's any

1 5 general unsecured creditors that have

1 6 current expense claims?

1 7 A No, we don't. We believe

1 8 there may be. But we don't.

1 9 Q Have you ever heard of a

2 0 company called General Unsecured Creditor

2 1 as I believe Cedarlake Capital?

2 2 A No.

2 3 Q If there was a general

2 4 unsecured creditor that also had a

2 5 current expense claim, would they be

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Exhibit A Page 11 of 21
1 DAVID BROWNSTEIN

2 treated similarly in your opinion to the

3 fuel line lenders?

4 MR. MERVIS: Objection to

5 the form.

6 A The answer is no. We don't

7 have a settlement with them. They didn't

8 negotiate a settlement. And the answer

9 would be it depends on if they settle and

1 0 how that settlement works. As you know,

1 1 there have been offers made.

1 2 Q Now, is it your

1 3 understanding that the fuel line lenders

1 4 are expressly named in the trust

1 5 agreement?

1 6 MS. SPILLANE: Objection to

1 7 form.

1 8 A I believe what's named is

1 9 fuel purchases; right?

2 0 Q Do you think that the trust

2 1 agreement references to the fuel line

2 2 lenders whether they're denominated by

2 3 some other name?

2 4 MS. SPILLANE: Objection to

2 5 form.

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Exhibit A Page 12 of 21
1 DAVID BROWNSTEIN

2 MR. MERVIS: I object to the

3 form.

4 Q Are the general unsecured

5 creditors parties to the trust agreement?

6 Do you know?

7 A Are they a separate party to

8 it?

9 Q Yes. Any party.

1 0 MR. MERVIS: Object to the

1 1 form.

1 2 A What do you mean any party?

1 3 Q Well, that's separate. I'm

1 4 not sure what you mean by separate. Take

1 5 out the word separate.

1 6 Are the general unsecured

1 7 creditors, other than the -- are they

1 8 parties to the trust agreement? Did they

1 9 sign?

2 0 MR. MERVIS: Object to the

2 1 form.

2 2 A I don't believe so, no.

2 3 Q Is it the board's position

2 4 that the trust agreement provides the

2 5 fuel line lenders with priority over

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Exhibit A Page 13 of 21
1 DAVID BROWNSTEIN

2 other bondholders?

3 MR. MERVIS: Object to the

4 form.

5 A What the board's position is

6 there's a risk in litigation that they

7 could win that claim. And therefore,

8 we're settling it.

9 Q And does that claim also

1 0 indicate -- is that claim also based on

1 1 the assertion that the fuel line lenders

1 2 have priority over other creditors that

1 3 are not bondholders?

1 4 MR. MERVIS: I'm sorry. One

1 5 second. Yeah. I object to the form.

1 6 A Yes. Now, again, as we

1 7 discussed a moment ago, it's possible

1 8 that some of the GUCs actually have

1 9 priority as well; right? That's

2 0 information we don't have.

2 1 Q Can you explain why? If the

2 2 general unsecured creditors are not party

2 3 to the trust agreement, why the fuel line

2 4 lenders would have priority over those

2 5 general unsecured creditors?

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Exhibit A Page 14 of 21
1 DAVID BROWNSTEIN

2 MS. SPILLANE: Object to

3 form.

4 MR. MERVIS: I object to the

5 form.

6 A As I said, there's -- in the

7 indenture, it refers to fuel purchase.

8 Q Should I take your response

9 to mean that it is the board's position

1 0 that the parties involved in fuel

1 1 purchases would have priority over any

1 2 other creditor?

1 3 MS. SPILLANE: Objection to

1 4 form.

1 5 MR. MERVIS: I object to the

1 6 form of the question.

1 7 A If the determination is no

1 8 one has a lien, so everyone is parity,

1 9 provided that there is a risk, our

2 0 position isn't that they're entitled to

2 1 it. Our position is that there's a risk

2 2 in litigation that they would win. And

2 3 so therefore, we are prepared to settle

2 4 that claim.

2 5 Q And that settlement includes

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Exhibit A Page 15 of 21
1 DAVID BROWNSTEIN

2 giving them a higher priority than the

3 unsecured creditors; correct?

4 MR. MERVIS: I object to the

5 form.

6 A Correct.

7 Q Now, under the plan, does

8 the recovery for the fuel line lenders

9 come solely out of the recovery that

1 0 would have otherwise gone to the

1 1 bondholders?

1 2 MS. SPILLANE: Objection to

1 3 form.

1 4 MR. MERVIS: Object to the

1 5 form.

1 6 A There is one pot of cash.

1 7 So it's not that it's only coming out of

1 8 the bondholders. That pot is available

1 9 for the bondholders, the GUCs, the fuel

2 0 line lenders and anyone else who we have

2 1 an obligation to. And therefore, it's

2 2 out of the pot in total, not out of just

2 3 the bondholders' share of the pot.

2 4 Q Has the board done an

2 5 analysis as to whether there are any

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Exhibit A Page 16 of 21
1 DAVID BROWNSTEIN

2 other current expense claims, other than

3 the fuel line lenders and what I had

4 mentioned earlier, potential GUC claims

5 for current expenses?

6 MR. MERVIS: I object to the

7 form of the question.

8 A The board has a consultant

9 who they work with on valuation of the

1 0 claims and determination as to whether

1 1 they're real claims or not. That's a

1 2 separate firm.

1 3 Q And does that include

1 4 categorizing them to determine whether or

1 5 not they're current expense claims?

1 6 A I don't know the answer. I

1 7 believe so. But I don't know for sure.

1 8 Q And who makes the

1 9 determination as to whether or not a

2 0 claim is a current expense claim?

2 1 MR. MERVIS: Object to the

2 2 form.

2 3 A I'm assuming the board's

2 4 consultant presents to the board each

2 5 claim for a consideration.

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Exhibit A Page 17 of 21
1 DAVID BROWNSTEIN

2 Q You don't know what the

3 factors are? Based on your testimony, it

4 seems to me you don't know what the

5 factors are in making that determination.

6 A No.

7 Q Earlier, you touched on the

8 fact that perhaps, a current expense

9 claim from a GUC should be treated

1 0 similarly to a fuel line lender current

1 1 expense claim. Did I understand that

1 2 correctly?

1 3 A No. That's not quite what I

1 4 said. I said that they may be on a

1 5 priority claim. I didn't say that they

1 6 would be or should be treated the same.

1 7 Q From that, should I -- do I

1 8 understand that your position is that a

1 9 current expense would be a priority claim

2 0 of some form?

2 1 A No. I'm not saying that.

2 2 Q Well, you said that it

2 3 should be treated -- a GUC with a --

2 4 A If they have, again, a

2 5 priority claim that is a true priority

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Exhibit A Page 18 of 21
1 DAVID BROWNSTEIN

2 form.

3 MS. SPILLANE: Objection to

4 form.

5 A What I would say to you is,

6 if you could show us it is a priority

7 claim, we'll consider it and think about

8 what we do about it. But to date, we

9 haven't been provided anything, as far as

1 0 I know, that shows there's a priority

1 1 claim, not just that it's an unsecured

1 2 claim. But it's a priority claim.

1 3 Q And what I'm asking is, one

1 4 of the factors that you would evaluate,

1 5 maybe not exclusively, is in determining

1 6 whether it's a priority claim is whether

1 7 it's a current expense?

1 8 MS. SPILLANE: Objection to

1 9 form.

2 0 A It is one of the factors.

2 1 But as you said, there's more to it than

2 2 being just a current expense. That's not

2 3 the only reason the fuel lines have a

2 4 priority. It's because it's a current

2 5 expense that says it has a priority.

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Exhibit A Page 19 of 21
1 DAVID BROWNSTEIN

2 Q Let me talk briefly about

3 National and that PSA.

4 Is it your understanding

5 that National has a contractual priority

6 over unsecured creditors under the trust

7 agreement or any other document?

8 A At the time we settled with

9 National, there had been no ruling from

1 0 Judge Swain as to whether they had a

1 1 secured lien or not. At that time, we

1 2 settled the claim with them as we were

1 3 prepared to do with others at the same

1 4 time. And that included, you know,

1 5 settling the fact that they may have a

1 6 secured lien.

1 7 Q Does that PSA with National

1 8 have a fiduciary out?

1 9 MR. MERVIS: Objection to

2 0 the form. You could answer.

2 1 A I don't believe so. It has

2 2 outs in it. But I don't believe it has a

2 3 fiduciary out.

2 4 Q Do you know why it doesn't?

2 5 MR. MERVIS: Objection to

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Exhibit A Page 20 of 21
1 DAVID BROWNSTEIN

2 the form.

3 A Not every PSA has a

4 fiduciary out. That simple. There's

5 reasons to put one in. We have outs.

6 They have outs here. It's not a

7 fiduciary out. If Judge Swain says that,

8 as you know, the reimbursement claim is

9 not a valid claim, they still have to

1 0 proceed. They don't have an out. We

1 1 don't have an out for that. And if she

1 2 says that they are not -- well, there's

1 3 several outs and other provisions. But

1 4 there isn't -- my recollection is there

1 5 isn't a fiduciary out in that agreement.

1 6 Q Well, you just referenced

1 7 that Judge Swain, if she doesn't approve

1 8 the reimbursement claim, but that's just

1 9 one element of several elements of that

2 0 PSA, isn't it?

2 1 A Yes, although they don't

2 2 get -- remember the reason that they gave

2 3 up their CVI was in part because they

2 4 were getting the reimbursement claim.

2 5 That doesn't step back in. That deal, as

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Exhibit A Page 21 of 21