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 

AAFAF’s Urgent Application and Notice of Revised Proposed $300 Million Loan from 

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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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 by the 

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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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 the same 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 

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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, to 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 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. 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 

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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. Prohibition on Granting of Liens or Additional Superpriority Claims. Without 

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. 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 

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

Facility. 

14. 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-ininterest under the Trust Agreement or applicable law. 

15. 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. 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 nondisclosure agreement acceptable to the Debtor promptly after delivery to the Lender and the 

Oversight Board. 

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

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

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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. 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. 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. 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. 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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