UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO, 

as representative of 

THE COMMONWEALTH OF PUERTO 

RICO, et al., 

Debtors.

PROMESA 

Title III 

No. 17-bk-3283-LTS 

(Jointly Administered) 

SUMMARY SHEET 

AMENDED APPLICATION OF CITIGROUP GLOBAL MARKETS 

INC. FOR ALLOWANCE OF PREPA TRANSACTION FEE 

Applicant: Citigroup Global Markets Inc. 

Authorized to Provide Services to: The Financial Oversight and Management 

Board for Puerto Rico 

Date of Retention: January 27, 2017 

Compensation Requested: $9,083,750 

Expense Reimbursement Requested: -- 

Total Requested: $9,083,750 

This is a: _ monthly X interim _final application 

PRIOR FEE APPLICATIONS 

Period 

Covered 

Date Filed 

(ECF #) 

Fees Requested Expenses 

Requested 

Order Date 

ECF# 

Fees 

Allowed 

Expenses 

Allowed 

5/3/17-

1/31/18

4/23/18 

ECF#2944

$625,000.00 $60,971.21 1/30/19

ECF#4998

$625,000.00 $28,780.19 

2/1/18-

5/31/18

10/5/18 

ECF#4020

$1,803,571.43 $40,912.98 7/24/20 

ECF#13824

$1,803,571.43 $30,513.96 

6/1/18-

9/30/18

1/25/19 

ECF #4897

$1,975,000.00 $20,450.63 12/7/20

ECF #15355

$1,975,000.00 $10,433.40 

COFINA 

Success Fee

6/10/19 

ECF#7341

$5,873,156.76 -- 7/24/20 

ECF#13824

$5,873,156.76 -- 

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 1 of 8
Period 

Covered 

Date Filed 

(ECF #) 

Fees Requested Expenses 

Requested 

Order Date 

ECF# 

Fees 

Allowed 

Expenses 

Allowed 

10/1/18- 

1/31/19

10/9/20 

ECF#14522

$1,975,000.00 $41,623.98 3/18/22

ECF#20412

$1,940,488.72 $41,623.98 

2/1/19- 

5/31/19

10/9/20 

ECF#14523

$4,300,000.00 $26,187.61 8/12/22

ECF#21826

$4,300,000.00 $9,827.90 

6/1/19- 

9/30/19

3/22/21 

ECF#16155

$4,705,000.00 $813,391.60 8/12/22

ECF#21826

$4,705,000.00 $811,563.30 

10/1/19- 

1/31/20

3/22/21 

ECF#16156

$4,840,000.00 $1,206.00 8/12/22

ECF#21826

$4,840,000.00 -- 

2/1/20- 

5/31/20

3/22/21 

ECF#16157

$4,840,000.00 $9,354.30 8/12/22

ECF#21826

$4,840,000.00 $7,022.70 

6/1/20- 

9/30/20

3/22/21 

ECF#16158

$4,840,000.00 $7,115.40 8/12/22

ECF#21826

$4,840,000.00 $3,417.00 

10/1/20- 

1/31/21

7/7/22 

ECF #21457

$4,840,000.00 $10,606.80 12/12/22

ECF#23045

$4,840,000.00 $7,982.70 

2/1/21- 

5/31/21

7/7/22 

ECF#21458

$4,840,000.00 $6,660.90 12/12/22

ECF#23045

$4,840,000.00 $6,017.10 

6/1/21- 

9/30/21

8/4/22 

ECF#21727

$4,840,000.00 $3,859.20 12/12/22

ECF#23045

$4,840,000.00 $3,426.30 

10/1/21- 

1/31/22

8/4/22 

ECF#21727

$4,840,000.00 $6,099.30 12/12/22

ECF#23045

$4,840,000.00 $5,092.50 

2/1/22- 

5/31/22

8/4/22 

ECF#21729

$4,840,000.00 $4,380.00 12/12/22

ECF#23045

$4,840,000.00 $4,380.00 

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 2 of 8
UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO, 

as representative of 

THE COMMONWEALTH OF PUERTO 

RICO, et al., 

Debtors.

PROMESA 

Title III 

No. 17-bk-3283-LTS 

(Jointly Administered) 

AMENDED APPLICATION OF CITIGROUP GLOBAL MARKETS, 

INC. FOR ALLOWANCE OF PREPA TRANSACTION FEE 

Citigroup Global Markets Inc. (“Citi”), investment banker and financial advisor to The 

Financial Oversight and Management Board for Puerto Rico (“Board”), as representative of the 

Debtors pursuant to PROMESA section 315(b), submits this amended1 application for allowance 

on an interim basis of the $9,083,750 transaction fee due under Paragraph 4(a)(i) of the “fees” 

clause of its engagement letter. In support, Citi relies upon the accompanying Declaration of John 

Gavin. 

JURISDICTION

1. The Court has subject matter jurisdiction to consider this amended application, 

pursuant to PROMESA § 306(a). 

2. Venue is proper under PROMESA § 307(a). 

BACKGROUND

3. Citi’s initial engagement letter (Gavin Decl. Exhibit 1) did not cover strategic 

advisory and investment banking services relating to PREPA. (Gavin Decl. ¶¶3-5.) 

1

 Amended pursuant to order entered June 22, 2023. (ECF Doc. #24632.) 

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 3 of 8
4. Citi and the Board accordingly entered into an amended and restated engagement 

letter dated February 13, 2018 (Gavin Decl. Exhibit 2) to provide for Citi to provide such for 

services, and for Citi to receive as compensation therefor, additional monthly fees 

($400,000/month) and a $21.5 million ($24 million less $2.5 million) transaction fee “payable 

upon consummation of a Transaction”, with Transaction defined as “a long-term concession 

agreement involving the Company’s [defined as PREPA] power transmission and distribution 

assets as well as providing advice in connection with a potential ‘privatization’ involving the 

Company’s power generation assets”, and “whether in one or a series of transactions.” (Id. ¶¶6-

8.) 

5. In relation to negotiations over the transaction fee, Citi submitted to the Board a 

Power and Utilities M&A Fee Precedents spreadsheet (id. ¶9, Exhibit 3) which articulates its 

rationale as follows: 

 Citi has proposed a success-based fee of $24mm (relevant 

comparison numbers are Sellside / Total Fee). The fee is to be 

realized upon a board-approved restructuring of PREPA. 

Milestone payments may be considered per mutual agreement. 

 At McKinsey & Company’s estimated value range of $4.9bn - 

$10.6bn1, the proposed success-based fee reflects approximately 

0.23% - 0.49% of total estimated deal value. 

- At the low-end of the potential value range, the percentage 

of deal value (0.49%) is approximately equivalent to the 

mean of the precedent transaction (0.47%), and at the highend of the potential value range, the percentage (0.23%) is 

well below both the mean and median statistics for precedent 

transactions (0.47% and 0.37% respectively) 

1 Reflects range of total estimated generation, transmission, and 

distribution reconstruction costs post-Hurricane Marta per a 

McKinsey & Company October 2017 report. 

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 4 of 8
The above estimated value range is generally consistent with PREPA’s April 2018 fiscal plan 

(id. Exhibit 4, at 19) which estimated its total assets at $9.4 billion and total liabilities at $11.4 

billion. 

6. An updated spreadsheet was later provided to the Board, under cover of a 

memorandum highlighting work performed in relation to the PREPA transactions. (Id. ¶10, Exhibit 

5.) The mean and median fee did not change in the updated spreadsheet. 

7. Several months after the amended and restated engagement letter was entered into, 

the Puerto Rico Electric Power System Transformation Act (Act 120) was enacted; and roughly 

ten months later the Puerto Rico Energy Public Policy Act (Act 57) was enacted. Together they 

required, and established a framework for, the unbundling of Puerto Rico’s electric system through 

the transfer of operation and maintenance responsibilities of the transmission and distribution 

(“T&D”) and generation systems to private operators. (Id. ¶¶13-14.) 

8. The Government of Puerto Rico accordingly pursued the T&D and generation 

systems separately, and also determined to seek to consummate the T&D component first. (Id. 

¶15.) 

9. On January 11, 2020, LUMA Energy2 was selected to engage the Puerto Rico 

Public-Private Partnerships Authority (“P3 Authority”) in negotiations pursuant to Act 120; and a 

T&D contract was executed June 22, 2020, under which LUMA Energy operates and maintains 

the T&D system. (Id. ¶16.) 

10. Based on the separation of transactions Citi and the Board determined to restructure 

the transaction fee for Services associated with PREPA Transaction(s), by bifurcating it into T&D 

2

 Defined in the plan as LUMA Energy, LLC, a joint venture between Quanta Services and 

Canadian Utilities Limited, an ATCO Ltd. Company, and LUMA Energy ServCo, LLC, its 

subsidiary. 

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 5 of 8
and generation system components in a third amended and restated engagement dated October 7, 

2020. (Id. ¶17, Exhibit 7.) 

11. $13,975,000 (65%) of the total fee was allocated to the T&D component (¶4(a)), 

and the $7,525,000 (35%) balance was allocated to the generation system component (¶4(b)). 

(Id. ¶18.) 

12. The split was intended to reflect differences in the relative complexity of the 

respective transactions and differences in operations size. (Id. ¶19.) 

13. As to the T&D component, $9,083,750 (65% of the $13,975,000 component) 

became payable upon entry of an order “allowing all accrued and unpaid ‘front-end transition’ 

obligations of the Company to LUMA Energy LLC, and LUMA Energy ServCo LLC as an 

administrative expense” and the $4,891,250 (35%) balance is payable upon the PREPA plan 

effective date. (Id. ¶20.) 

14. The split was intended to compensate Citi for work performed in structuring the 

T&D transaction, with a sizeable holdback payable after all conditions precedent are satisfied 

(the last of which is plan consummation). (Id. ¶21.) 

15. The subsequent amendments (id. Exhibits 8-9, summarized at id. ¶¶23-28) to Citi’s 

engagement terms did not modify the PREPA fee provisions. 

16. Citi previously submitted a fee statement for the $9,083,750 transaction fee 

provided in Paragraph 4(a), seeking payment of 90% of the same ($8,175,375) in January 2021 

under the terms of the monthly fee order. No objection was interposed, and the amount was paid, 

following its submission of a no objection statement. The invoice for the subject transaction fee 

was attached to the initial application. (ECF Doc. #23202.)

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 6 of 8
BASIS FOR RELIEF REQUESTED 

17. PROMESA section 316(a) provides that the Court “may award to a professional 

person employed by ... the [FOMB] (in [its] sole discretion) ... (1) reasonable compensation for 

actual, necessary services rendered by the professional, or attorney and by any paraprofessional 

employed by any such person; and (2) reimbursement for actual, necessary expenses.” 

18. Pursuant to subdivision (c): 

In determining the amount of reasonable compensation to be 

awarded to a professional person, the court shall consider the nature, 

the extent, and the value of such services, taking into account all 

relevant factors, including— 

(1) the time spent on such services; 

(2) the rates charged for such services; 

(3) whether the services were necessary to the administration of, or 

beneficial at the time at which the service was rendered toward the 

completion of, a case under this chapter; 

(4) whether the services were performed within a reasonable 

amount of time commensurate with the complexity, importance, and 

nature of the problem, issue, or task addressed; 

(5) with respect to a professional person, whether the person is 

board certified or otherwise has demonstrated skill and experience 

in the restructuring field; and 

(6) whether the compensation is reasonable based on the customary 

compensation charged by comparably skilled practitioners in cases 

other than cases under this title or title 11, United States Code. 

19. PROMESA section 317 and the interim compensation order permit professionals 

to apply for allowance of compensation and reimbursement of expenses on an interim basis. 

20. The reasonableness of the requested fee is evidenced by the materials furnished to 

the Board and PREPA’s April 2018 fiscal plan (Gavin Decl. Exhibits 3, 4 and 5) which 

demonstrate that the PREPA transaction fee is a reasonable percentage of the estimated value of 

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 7 of 8
the transaction at the time the amended and restated engagement letter providing for said fee was 

entered into. 

21. The quality of Citi’s work is also reflected by the fact that, after the third amended 

and restated engagement letter bifurcating the PREPA transaction fee provided under the amended 

and restated engagement letter was executed, the Board increased Citi’s responsibilities by (a) 

designating Citi lead negotiator under the Order Concerning Continuation of PREPA Mediation

entered September 20, 2022 (ECF Doc. #22313), to facilitate the mediation team and other parties’ 

interaction with the Board, work for which it is not receiving any additional compensation and 

which was of course critical to the formulation of PREPA’s plan of adjustment, and (b) engaging 

Citi in relation to potential privatization of Puerto Rico Highways and Transportation Authority 

toll roads. (Gavin Decl. ¶¶28-30.) 

22. The certification required by Rule 2016 and P.R. LBR 2016-1(a)(4) is included in 

the Gavin Declaration (at ¶¶34-37). 

WHEREFORE, Citi requests interim allowance of the $9,083,750 transaction fee and such 

other and further relief as the Court deems just and proper. 

Dated: June 30, 2023 Respectfully submitted, 

/s/ John Gavin 

John Gavin 

Managing Director 

Citigroup Global Markets Inc. 

Prepared by: 

/s/ Jeffrey Chubak 

Jeffrey Chubak 

AMINI LLC 

131 West 35th Street, 12th Floor 

New York, New York 10001 

(212) 490-4700 

jchubak@aminillc.com 

Attorneys for Citigroup Global Markets Inc.

Case:17-03283-LTS Doc#:24694 Filed:06/30/23 Entered:06/30/23 12:03:14 Desc: Main

Document Page 8 of 8