Exhibit K

Case:17-03283-LTS Doc#:3961-12 Filed:09/21/18 Entered:09/21/18 21:28:34 Desc:

Exhibit K Page 1 of 4
PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

Financial Oversight and Management Board for Puerto Rico

PRESS RELEASE

For Immediate Release

OVERSIGHT BOARD AUTHORIZES GOVERNMENT DEVELOPMENT BANK TO 

RESTRUCTURE DEBTS UNDER TITLE VI OF PROMESA 

Conditionally certifies GDB’s Restructuring Support Agreement; participating creditors will be 

able to exchange existing claims against GDB for new bonds; on-island and off-island creditors 

to be treated equally

(San Juan, PR – July 14, 2017) – The Financial Oversight and Management Board for Puerto 

Rico (the “Oversight Board”) created by Congress under the bipartisan Puerto Rico 

Oversight, Management and Economic Stability Act ("PROMESA" or the "Act") today 

authorized the Government Development Bank for Puerto Rico (“GDB”) to pursue the 

restructuring of its debts under Title VI of PROMESA and conditionally certified GDB’s 

Restructuring Support Agreement (“RSA”) under the relevant provisions of Title VI.

The Oversight Board’s decision was in response to a Fiscal Agency and Financial Advisory 

Authority (“FAFAA”) request, dated June 30, 2017, in which the agency noted that the 

proposed restructuring, along with certain related settlements contemplated by the RSA, 

will result in an efficient wind down of GDB’s operations and a comprehensive financial 

restructuring of GDB’s obligations. FAFAA noted further that by proceeding under Title VI 

of PROMESA with the requisite creditor support, GDB believes that it will realize its 

objective of maximizing value for its stakeholders, while avoiding the delay, expense and 

uncertainty associated with litigation. 

The RSA provides for the organized and consensual restructuring of a substantial portion 

of GDB’s liabilities, including GDB public bonds, deposit claims by municipalities and 

certain non-public entities and claims under certain GDB-issued letters of credit and 

Case:17-03283-LTS Doc#:3961-12 Filed:09/21/18 Entered:09/21/18 21:28:34 Desc:

Exhibit K Page 2 of 4
PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

guarantees (“Participating Bond Claims”). In exchange for releasing GDB from liability 

relating to these claims, the claim-holders will receive new bonds to be issued by a new 

entity (the “Issuer”).

In order to secure and service the new bonds, GDB will transfer to the Issuer its entire 

municipal loan portfolio, certain real estate assets available for sale, proceeds of certain 

public entity loans and a certain amount of cash.

The new bonds will consist of three tranches (or series), A, B or C, each with different 

terms—including different coupon rates and upfront exchange ratios—from which the 

claimants can choose. In general, the higher the exchange ratio between the value of the 

current claim and the value of the new bonds, the lower the coupon rate.

Tranche 

A

Tranche 

B

Tranche 

C

Amortization + Collateral Priority First First Second

Upfront Exchange Ratio 55% 60% 75%

Coupon (%) 7.50% 5.50% 3.50%

Maturity 1-Jul-40 1-Jul-40 1-Jul-40

Tranches A and B will be secured by a first lien on the assets to be transferred from GDB to 

the Issuer with respect to principal payments and will be entitled to amortizing principal 

payments from available cash on an equal basis. Tranche C will be secured by a second lien 

on the assets with respect to principal payments and, unless an event of default occurs, will 

not be entitled to any principal payments until Tranches A and B bonds are paid in full. 

Interest will be paid semi-annually on an equal basis on all three tranches to the extent of 

available cash from collections. Interest will be paid “in kind” if cash on the related semiannual payment date is insufficient.

The RSA already has the support of 51% of the Participating Bond Claims. According to 

FAFAA, as of June 21, 394 individual parties, holding more than $2.45 billion in claims 

against GDB, have signed the RSA, the vast majority of which constitute on-island creditors. 

Indeed, more than 300 on-island bondholders and an additional 50 on-island credit unions 

have entered into the RSA. The RSA is also supported by the Ad Hoc Group of GDB 

bondholders, which holds more than $1 billion of GDB public bonds. 

Under the RSA, Puerto Rico Municipality Depositors and on-island GDB bondholders are 

treated equally with off-island GDB bondholders, all as general unsecured creditors.

Case:17-03283-LTS Doc#:3961-12 Filed:09/21/18 Entered:09/21/18 21:28:34 Desc:

Exhibit K Page 3 of 4
PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

Puerto Rico residents and Puerto Rico institutions who are GDB creditors comprise 56% of 

GDB’s creditors.

###

Contact:

José Luis Cedeño

787-400-9245

jcedeno@forculuspr.com

info@forculuspr.com

Board’s Contact Information:

E-mail: comments@oversightboard.pr.gov

Website: www.oversightboard.pr.gov

Case:17-03283-LTS Doc#:3961-12 Filed:09/21/18 Entered:09/21/18 21:28:34 Desc:

Exhibit K Page 4 of 4