EXHIBIT 25 

Case:17-03283-LTS Doc#:3126-25 Filed:05/23/18 Entered:05/23/18 11:45:37 Desc:

Exhibit Reorg Research Article re: Talks to Improve Certified Fiscal Plan Page 1 of 3
Puerto Rico

PROMESA Board, Commonwealth in Talks to ‘Improve’ Certified Fiscal Plan 

Tue 04/24/2018 16:54 PM

The PROMESA oversight board and the administration of Gov. Ricardo Rosselló are holding

conversations about “improving” the commonwealth fiscal plan, which was certified last Thursday.

PROMESA oversight board Chairman José Carrión discussed the talks during an interview today with

Noti-Uno radio station, saying that they were part of efforts to avoid a costly legal battle and to

ensure the fiscal plan’s implementation. Christian Sobrino, the governor’s non-voting

representative on the board, confirmed the talks, telling Reorg Research that “conversations are

indeed taking place.”

The board chairman said he would not “enter into details” of the ongoing conversations but

discussed them while addressing the administration’s stated opposition to a labor reform and a $200

million annual cut in pension benefits that the board included in the certified fiscal plan.

“We would like the executive and Legislature to reconsider and take the fiscal plan as the route to

follow and implement it. Unfortunately, if we don’t achieve this goal, one of the options we are

considering will be the legal issue. I am concerned ... because this carries an additional cost for the

public and is something that we obviously want to avoid,” Carrión said.

“What are we doing to avoid this? Without entering into details, we have had conversations to see if

we can push forward with something that makes sense to improve the certified fiscal plan,” he added.

During the interview, the PROMESA board chairman reiterated that the board and administration

agree on the “vast majority” of the reforms and initiatives contained in the fiscal plan, but he

acknowledged that the two major differences - the pension cut and labor reform - are “material” to

the fiscal plan.

Carrión emphasized that the proposed labor reform is an “extremely important” initiative that is

expected to produce $1.2 billion over the six-year course of the plan.

Meanwhile, the proposed pension benefit cut is important not only because of the $200 million in

annual savings it will generate but because it is an important step to show that the fiscal plan is

“balanced.”

“The reason we are promulgating this type of cut and reform is we need to present a balanced plan to

undertake a restructuring,” he said, referring to the plan of adjustment process outlined under

PROMESA that requires approval from the Title III court. Carrion said that the fiscal plan is

“essential” to being able to finish debt restructuring negotiations because it contains a series of

projections that imply the capacity to pay debt. He said that both the fiscal plan and subsequent plan

of adjustment that will be submitted to the court must be balanced under the PROMESA statute.

“If we don’t do this, there exists the probability that the judge takes the issue of the percentage into

her hands and decides for more severe cuts,” Carrión said, adding that during the Detroit bankruptcy,

police and firefighters received pension cuts of about 13% and general government workers suffered

cuts of about 20%.

The PROMESA board chairman said that bondholders have a higher payment priority under the law

than pensioners. “Legally, the bondholders in effect have rights over pensioners, which are

unsecured creditors. ... In effect, there is a reality that first come the bondholders and afterwards

come the pensioners. We want to ensure that the cut will be modest and we can justify the debt

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restructuring in front of the judge.”

During the interview, Carrión said that in the case of public corporations with their own pension

systems, the cuts would be made through the Title III court process. Although the average 10% cuts

to pension benefits are outlined in the certified commonwealth fiscal plan, the plan states that one

important aspect of the proposed reform - the freezing of current pension benefits for teachers and

the judiciary - will be “implemented through the Plan of Adjustment.”

Resident Commissioner Jenniffer González told Reorg Research during a Monday interview that the

entire pension issue should be handled through the Title III court process because beneficiaries will

likely challenge in the courts any move to reduce their benefits, and that would only work to delay the

implementation of the fiscal plan.

News of the talks between the board and commonwealth regarding potential improvements to the

fiscal plan comes a day after the U.S. House Natural Resources Committee released a statement

urging increased collaboration between the board and the commonwealth. “The Committee is

reviewing the newly approved fiscal plans, but [Chairman Rob Bishop, R-Utah] is hopeful the

structural reforms imposed by the certified plans will finally begin to guide Puerto Rico along the

path towards fiscal accountability, balanced budgets, and much needed government reforms,”

Committee spokeswoman Katie Schoettler said. “The lofty goals will require effective

implementation by the Puerto Rican government, and we encourage increased collaboration with the

Oversight Board to ensure the goals of PROMESA are accomplished, allowing the island access to the

capital markets and the growing of a strong and sustainable economy.”

During the radio interview, Carrión also noted that the Puerto Rico Legislature is the second most

costly on a per capita basis in the U.S. when compared with state legislatures, trailing only Alaska.

While the fiscal plan calls for a 17.5% or $20 million cut to the Legislature, Carrión said that it would

take an 85% cut to bring the legislature in line with other state legislatures. “Puerto Rico is a poor

country, and the legislature does not reflect this,” the board chairman said.

In a subsequent interview on Noti-Uno, Senate President Thomas Rivera Schatz responded by

questioning the achievements of the board and saying that that Carrión, as a businessman, stands to

benefit from the labor reform and other initiatives the board is pushing.

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Case:17-03283-LTS Doc#:3126-25 Filed:05/23/18 Entered:05/23/18 11:45:37 Desc:

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