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.

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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”); and 

 

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) 

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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 is into the extent granted herein is 

necessary for the best interests of the Debtor, its creditors, and other parties in interestimpacted 

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 a

hearing held before the Court (the “Hearing”); and the courtCourt 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 the legal and 

factual bases set forth in the Urgent Motion, as modified by the Urgent Joint Application, and at 

the Hearing establishthere is just cause for the relief granted herein; and upon the record 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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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”) and the other Credit 

Documents, to finance operating expenses that (i) constitute Eligible Uses and (ii) are included in 

the initial 13-week cash flow budget attached heretofiled 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”); provided, that, absent further order of the Court, the Commitment shall be limited to 

$300 million (the “Initial Facility”). 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 the Initial Facility, at a low rate of interest,$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 Initial Facility represents the best financing available to it has been offered at 

this time. 

 

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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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 DocumentsAgreement and such other necessary documents on substantially similar terms 

as the terms of the Credit Agreement and this Order (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 Initial 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 and asto 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 onto the termsextent 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 Initial 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 

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of this Order, available financing and 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,” as defined in the Motion.

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 

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 Initial Facility willFacility 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 Initial 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 

Initial Facility shall expire, and the loans made pursuant to this Order and the Credit Documents 

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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 

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 Initial 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 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 mayshall 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 

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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 Initial Facility is funded through a Commonwealth Financing that 

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

assignment of any rights under the Credit Documents, such material economic terms shall not 

become effective without further Court order, which mayshall be submitted on presentment with 

notice to parties in interest in accordance with the case management procedures (a “Material 

Increase Authorization”). .

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 

Initial 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 grantedallowed 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 Initial 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 certain categories of expenses, all 

of which constitute “Current Expenses” under the Trust Agreement. As such, the Debtor’s 

repayment obligations to the Lender for amounts borrowed under the Initial Facility shall be 

deemed to betreated as “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 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. Prohibition on Granting of Liens or Additional Superpriority Claims. 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 

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the obligations arising under the Initial 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. 16. 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-in-interest under the Trust Agreement or applicable law. 

14. 17. 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 

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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 Initial 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. 18. 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, but the decision whether to provide any such 

additional information shall be made in the Debtor’s sole discretion. . 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.

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. 19. Priority of Terms. To the extent of any conflict between or among (a) the 

express terms or provisions of any of the Credit Documents, the Urgent Motion, any other order of 

this Court, or any other agreements, on the one hand, and (b) and the terms and provisions of this 

Order, on the other hand, except to the extent such term or provision herein is phrased in terms of 

“as defined in” “as set forth in” or “as more fully described in” the Credit Documents (or words of 

similar import), the terms and provisions of this Order shall govern.this Order shall govern. To the 

extent any of the terms or provisions of the Credit Documents are deemed ambiguous, any 

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ambiguity will be resolved in a manner that renders the Credit Documents consistent with this 

Order. 

18. 20. 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. 21. 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.

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20. 22. 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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Exhibit 1

Budget

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Document 1 ID

file://C:\Users\9537\Desktop\Puerto Rico\PREPA\Revised 

Financing\Ex. C - Modified Financing Order 

FINALdocx.docx

Description Ex. C - Modified Financing Order FINALdocx

Document 2 ID

file://C:\Users\9537\Desktop\Puerto Rico\PREPA\Revised 

Financing\Exhibit A - Revised Proposed Financing 

Order.docx

Description Exhibit A - Revised Proposed Financing Order

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