Exhibit U

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Municipal Secondary Market Disclosure Information Cover Sheet 

Municipal Securities Rulemaking Board (MSRB)

Electronic Municipal Market Access System (EMMA) 

Additional / Voluntary Event-Based Disclosure

THIS FILING RELATES TO ALL OR SEVERAL SECURITIES ISSUED BY THE ISSUER, OR ALL OR SEVERAL 

SECURITIES OF A SPECIFIC CREDITOR:

Issuer’s Name: Government Development Bank for Puerto Rico (GDB)

Other Obligated Person’s Name (if any): 

Base CUSIP number(s): 745177

TYPE OF INFORMATION PROVIDED: 

A. Amendment to Continuing Disclosure Undertaking

B. Change in Obligated Person

C. Notice to Investor Pursuant to Bond Documents

D. Communication from the Internal Revenue Service

E. Bid for Auction Rate and Other Securities

F. Capital or Other Financing Plan 

G. Litigation / Enforcement Action

H. Change of Tender Agent. Remarketing Agent or Other On-going Party

I. Derivative or Other Similar Transaction

J. Other Event-Based Disclosures: Enclosed is the draft Fourth Amendment (the “Fourth Amendment”) to the 

Restructuring Support Agreement, dated May 15, 2017, by and among Government Development Bank for Puerto Rico (“GDB”), 

the Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), and the Supporting Bondholders party thereto ( the 

“RSA”). The draft Fourth Amendment attached hereto is supported by the GDB, AAFAF, and a significant portion of the creditors 

to the RSA. The Fourth Amendment will be solicited for approval by all parties to the RSA and will not be effective until the 

Requisite Bondholders (as defined under the RSA) approve the Fourth Amendment.

I represent that I am authorized by the issuer, obligor or its agent to distribute this information publicly.

/s/ Sebastián M. Torres Rodríguez

Sebastián M. Torres Rodríguez 

Puerto Rico Fiscal Agency and Financial Advisory Authority, 

 as Fiscal Agent for the Commonwealth

Dated: March 27, 2018 

PO Box 42001 • San Juan, PR 00940-2001 • Telephone (787) 722-2525

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FOURTH AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT,

dated as of March [__], 2018 (this “Amendment”), is among the Government Development Bank 

for Puerto Rico (“GDB”), the Puerto Rico Fiscal Agency and Financial Advisory Authority 

(“AAFAF”), and the Supporting Bondholders (as such term is defined in that certain Restructuring 

Support Agreement dated as of May 15, 2017, as amended by the First Amendment to 

Restructuring Support Agreement, dated October 20, 2017, and Second Amendment to 

Restructuring Support Agreement, dated December 20, 2017, and Third Amendment to 

Restructuring Support Agreement, dated March 20, 2018 (together with this Amendment, the 

“Agreement”)).

Each of the signatories to the Agreement shall be referred to herein as a “Party” (and 

collectively referred to herein as the “Parties”).

RECITALS

WHEREAS, (a) at least a majority of the outstanding principal amount of the GDB Bonds 

held by Supporting Bondholders that are “cooperativas” insured by the Corporation for the 

Supervision and Insurance of Cooperatives in the Commonwealth of Puerto Rico as of the 

Amendment Effective Date (as defined below); (b) at least a majority of the outstanding principal 

amount of the GDB Bonds held by Supporting Bondholders domiciled in the Commonwealth of 

Puerto Rico of the Amendment Effective Date other than those described in the foregoing clause 

(a); (c) at least a majority of the outstanding principal amount of the GDB Bonds held by all 

Supporting Bondholders as of the Amendment Effective Date other than those described in the 

foregoing clauses (a) and (b); (d) GDB; and (e) AAFAF have agreed to amend the Agreement on 

the terms described in Section 2 of this Amendment in accordance with Section 10 of the 

Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of 

which are hereby acknowledged, the Parties, by and through their undersigned counsel, hereto 

agree as follows:

SECTION 1. Certain Defined Terms. Capitalized terms used but not otherwise defined 

herein shall have the respective meanings set forth in the Agreement.

SECTION 2. Amendment to the Restructuring Support Agreement. On the Amendment 

Effective Date, the Agreement is hereby amended as follows:

(a) Clauses 6(a)(iii) and 6(b)(v) of the Agreement are hereby amended and restated in

their entirety to each read as follows:

“(iii) At 11:59 p.m. Eastern Time on June 8, 2018 unless solicitation of the 

Qualifying Modification has been completed in accordance with section 601(h)(1) 

of PROMESA.”

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(b) Clauses 6(a)(iv) and 6(b)(vi) of the Agreement are hereby amended and restated in 

their entirety to each read as follows:

“(iv) At 11:59 p.m. Eastern Time on June 28, 2018, unless the District Court shall 

have entered the Confirmation Order in form and substance reasonably satisfactory 

to GDB, AAFAF, and the Requisite Bondholders.”

(c) the Restructuring Term Sheet attached as Exhibit A to the Agreement is hereby 

amended and replaced in its entirety by the Restructuring Term Sheet attached hereto as Exhibit A.

SECTION 3. Conditions Precedent to Effectiveness of This Amendment. This 

Amendment shall become effective as of the date (the “Amendment Effective Date”) when GDB 

and AAFAF shall have received executed signature pages to this Amendment from the Requisite 

Bondholders.

SECTION 4. Representations and Warranties. Each of the Parties, by and through their 

undersigned counsel, hereby represents and warrants as to itself only that:

(a) As of the date hereof and after giving effect to this Amendment, the representations 

and warranties made in the Agreement are true and correct in all material respects as if made on 

the date hereof (other any such representations and warranties that, by their terms, expressly refer 

to being made only as of a date other than the date hereof).

(b) This Amendment has been duly executed and delivered by the advisors to each

Material GDB Bondholder Group, GDB, and AAFAF, and is a legal, valid and binding obligation 

of each Party, enforceable against each Party in accordance with its terms, except as may be limited 

by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

SECTION 5. Governing Law; Jurisdiction; Waiver of Jury Trial. 

(a) This Amendment shall be construed and enforced in accordance with, and the rights 

of the Parties shall be governed by, the laws of the State of New York and PROMESA, without 

giving effect to the conflict of laws principles thereof; provided that any issues addressing the 

fiduciary or statutory duties of GDB or its governing board shall be governed by and construed in 

accordance with the laws of the Commonwealth of Puerto Rico. Each of the Parties irrevocably 

agrees that any legal action, suit, or proceeding arising out of or relating to this Amendment (or 

the transactions contemplated hereby) brought by any Party or its successors or assigns shall be 

brought in any federal district court sitting in Puerto Rico and any appellate court from any thereof 

or, in the event such federal court does not have or accept jurisdiction, a Commonwealth court and 

any appellate court from any thereto (collectively, the “Puerto Rico Courts”), and each of the 

Parties hereby irrevocably submits to the exclusive jurisdiction of the Puerto Rico Courts for itself 

and with respect to its property, generally and unconditionally, with regard to any such proceeding 

arising out of or relating to this Amendment and the Restructuring. Each of the Parties agrees not 

to commence any proceeding relating hereto or thereto except in any federal district court sitting 

in Puerto Rico, other than proceedings in any court of competent jurisdiction to enforce any 

judgment, decree or award rendered by any Puerto Rico Court. Each of the Parties further agrees 

that notice as provided in Section 24 of the Agreement shall constitute sufficient service of process 

and the Parties further waive any argument that such service is insufficient. Each of the Parties 

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hereby irrevocably and unconditionally waives and agrees not to assert that (i) a proceeding in any 

federal court sitting in the Puerto Rico district is brought in an inconvenient forum, (ii) the venue

of such proceeding is improper or (iii) that any federal district court sitting in Puerto Rico and any 

appellate court from any thereof lacks jurisdiction over such proceeding or any party thereto. For 

the avoidance of doubt, the GDB Parties submit to the jurisdiction of any federal district court 

sitting in Puerto Rico and any appellate court from any thereof and irrevocably waive any 

immunity from suit in federal court that they may have for any action or proceeding arising out of 

or relating to this Amendment and the Restructuring.

(b) Each Party hereby waives, to the fullest extent permitted by applicable law, any 

right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or 

relating to this Amendment or the transactions contemplated hereby (whether based on contract, 

tort or any other theory).

SECTION 6. Execution of Agreement. This Amendment may be executed and delivered 

in any number of counterparts and by way of electronic signature and delivery, each such 

counterpart, when executed and delivered, shall be deemed an original, and all of which together 

shall constitute the same agreement. Except as expressly provided in this Amendment, each 

individual executing this Amendment on behalf of a Party has been duly authorized and 

empowered to execute and deliver this Amendment on behalf of such Party.

SECTION 7. Headings. The headings of all sections of this Amendment are inserted 

solely for the convenience of reference and are not a part of and are not intended to govern, limit, 

or aid in the construction or interpretation of any term or provision hereof.

SECTION 8. Continuing Effectiveness, etc. After giving effect to this Amendment, the 

Agreement shall remain in full force and effect and is hereby ratified, approved and confirmed in 

each and every respect. The amendments set forth herein are limited as written, and except as 

specifically provided in this Amendment, no other amendments, waivers, revisions or changes to 

the terms of the Agreement shall be made or permitted hereby. Upon the effectiveness of this 

Amendment, each reference in the Agreement to “this Agreement,” “hereunder,” “hereof,” or 

words of similar import shall mean and be a reference to the Agreement as amended hereby. 

[Signature Pages Follow]

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Exhibit A 

Restructuring Term Sheet

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EXHIBIT A to

Restructuring Support Agreement

Government Development Bank for Puerto Rico

OUTLINE OF TRANSACTION STRUCTURE FOR RESTRUCTURING OF GDB LIABILITIES

This term sheet (the “Term Sheet”) is a summary of indicative terms and conditions for a proposed financial 

restructuring of certain financial obligations of the Government Development Bank for Puerto Rico (“GDB”) 

through a Qualifying Modification (the “Restructuring” or the “Qualifying Modification”) pursuant to Title VI 

of the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”). The financial 

obligations of GDB to be included in the Restructuring include (i) bonds issued and outstanding pursuant to 

(a) that certain trust indenture dated as of February 17, 2006, as amended or supplemented, between GDB and 

Wilmington Trust, National Association, as successor trustee, and (b) that certain trust indenture dated as of 

April 29, 2016, as amended or supplemented, between GDB and UMB Bank, National Association, as trustee 

(collectively, the “Existing GDB Public Bonds”), and (ii) certain deposits and other outstanding obligations of 

GDB identified below.

This Term Sheet is solely for the purposes set forth in the Restructuring Support Agreement (the “RSA”), 

dated May 15, 2017 (as amended pursuant to the terms thereof) among GDB and certain holders of the 

Existing GDB Public Bonds, and acknowledged and agreed to by the Puerto Rico Fiscal Agency and Financial 

Advisory Authority (“AAFAF” by its Spanish acronym), or any other Qualifying RSA (as defined in the 

RSA). Except to the extent provided in the RSA or any Qualifying RSA, this Term Sheet does not constitute a 

commitment by any party and in any event is subject to the terms and conditions hereof, including, without 

limitation, requisite approvals under Title VI of PROMESA and execution and delivery of definitive 

agreements (the “Definitive Documents”).

Legislation The Restructuring shall be carried out pursuant to Act No. 109-2017, also 

known as the Government Development Bank for Puerto Rico Debt 

Restructuring Act (the “GDB Restructuring Act”

1

); provided that 

notwithstanding any repeal, annulment, withdrawal, amendment or 

modification or other failure of the GDB Restructuring Act or any provision 

therein to remain in full force and effect, the terms and conditions identified in 

this Term Sheet shall remain in full force and effect as the terms and conditions 

of the Restructuring and shall be carried out in another manner, whether by 

alternative legislation or otherwise.

Issuer of New Bonds Issuer. Pursuant to, or otherwise consistent with, Article 201 of the GDB 

Restructuring Act, a statutory public trust and governmental public 

instrumentality of the Commonwealth of Puerto Rico (the “Issuer”) shall be 

created to issue the New Bonds (as defined below). The form of the Issuer shall 

be acceptable to the Requisite Bondholders, as defined in the RSA (the “RSA 

Requisite Bondholders”), provided that the form of the Issuer established 

pursuant to the GDB Restructuring Act, as in effect on August 24, 2017, is 

 

1 References herein to the GDB Restructuring Act refer to the act as in effect on August 24, 2017 unless an 

amendment thereto reflects changes set forth in this Term Sheet or is otherwise in form and substance satisfactory to 

the RSA Requisite Bondholders (as defined below), except as otherwise specified.

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deemed acceptable to the RSA Requisite Bondholders. 

Indenture Trustee for New Bonds. An indenture trustee (the “Indenture 

Trustee”) will act for the benefit of holders of New Bonds. Upon the issuance 

of the New Bonds, pursuant to, or otherwise consistent with, Article 402 of the 

GDB Restructuring Act, as in effect on August 24, 2017, the New Bonds will 

be automatically secured by a perfected, valid and binding statutory lien on the 

New Bond Collateral (as defined below) in favor of the Indenture Trustee for 

the benefit of the holders of New Bonds. The Indenture Trustee (or, if 

necessary for certain tasks the Indenture Trustee is unable or unwilling to 

perform, a designated calculation agent or other service provider) will perform 

administrative functions customary for transactions of this type.

Servicer and Collateral Monitor. The assets of the Issuer will be managed by a 

designated servicer (the “Servicer”) pursuant to a servicing agreement with the 

Issuer (the “Servicing Agreement”). The identity of the initial Servicer and 

terms of the initial Servicing Agreement (including compensation) shall be 

acceptable to the RSA Requisite Bondholders.2 The activities of the Servicer 

and the condition and performance of the New Bond Collateral (as defined 

below) will be monitored by a collateral monitor (the “Collateral Monitor”) 

engaged by the Indenture Trustee, or another entity on behalf of the holders of 

New Bonds, pursuant to a monitoring agreement (the “Collateral Monitor 

Agreement”). The identity of the initial Collateral Monitor and the terms of the 

initial Collateral Monitor Agreement shall be acceptable to the RSA Requisite 

Bondholders, GDB and AAFAF. The Collateral Monitor shall have reasonable 

access to the Servicer and all information necessary in order to carry out its 

duties. 

For more information regarding the structure of and governance of the Issuer 

and the Servicing Agreement, see Structure and Governance of Issuer below.

Participating Bond 

Claims

The holders (“Holders”) of the liabilities of GDB set forth on Schedule 1 hereto 

(the “Participating Bond Claims”) will be subject to and bound by the 

Qualifying Modification pursuant to Title VI of PROMESA, including:

 All claims in respect of Existing GDB Public Bonds;

 

2

If the Servicer is provided with an incentive compensation arrangement based on asset recoveries, the position of 

incentive compensation arrangements in the distribution waterfall shall be acceptable to the RSA Requisite 

Bondholders. The Servicer shall be a “qualified” and “independent” (as such terms are defined in the Definitive 

Documents) firm of recognized national standing with the requisite expertise and Spanish speaking capability, and 

which is acceptable to GDB, AAFAF, and the RSA Requisite Bondholders. The Servicer will be engaged on or 

before the Closing Date, on arms-length, market terms in form and substance satisfactory to GDB, AAFAF, and the 

RSA Requisite Bondholders. The Servicer will be selected by a competitive RFP process prior to the solicitation of 

holders of Participating Bond Claims, and GDB shall use commercially reasonable efforts to effectuate the transition 

of its duties to the Servicer as soon as practicable.

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 The claims against GDB identified on Schedule 1; and

 The claims in respect of the contingent and unliquidated claims on 

Schedule 2.3

For the avoidance of doubt, the liabilities of GDB that are not Participating 

Bond Claims will not be the subject of the Qualifying Modification, but the 

Qualifying Modification shall be subject to and conditioned upon the treatment 

of such claims to the extent specified below.

Overview of 

Restructuring 

Transaction

Exchange of Participating Bond Claims for New Bonds

GDB and the Holders of the Participating Bond Claims will undertake a 

financial restructuring of the Participating Bond Claims through a Qualifying 

Modification implemented under Title VI of PROMESA on the terms and 

conditions set forth herein. Pursuant to such Qualifying Modification, on the 

date on which the conditions described under “Conditions” below have all been 

satisfied or waived by the RSA Requisite Bondholders (the “Closing Date”): 

i. all Holders of Participating Bond Claims will exchange their 

Participating Bond Claims for new bonds (the “New Bonds”) 

which shall be book-entry only bonds held by DTC; and

ii. GDB will transfer the Recovery Authority Assets to the Issuer in 

consideration for the Issuer’s issuance of the New Bonds in 

connection with the exchange of the Participating Bond Claims as 

set forth above.

Upon a Holder of Participating Bond Claims exchanging such Participating 

Bond Claims for New Bonds, and execution of the Keepwell Agreement 

described below, the Holder of the Participating Bond Claim shall, immediately 

and forever, and without further actions or documentation, cease to have any 

right, interest or claim against GDB or any of its assets, or any successors or 

assigns thereof and the Participating Bond Claims shall be extinguished and 

canceled. In connection with the Qualifying Modification, GDB shall enter into 

the Keepwell Agreement. For more information, see “Keepwell Agreement” 

below.

The issue price of the New Bonds (as determined for U.S. federal income tax 

purposes) shall be allocated first to principal and then to accrued but unpaid 

interest.

For each $1,000 of Participating Bond Claims held by a Holder (which, for the 

avoidance of doubt, shall be calculated to include principal plus interest accrued 

up to but not including the Closing Date in respect of Existing GDB Public 

Bonds), such Holder shall receive New Bonds having a face amount equal to 

 

3 No New Bonds will be issued at closing in respect of contingent and unliquidated claims as to which no claim has 

been made prior to the Closing Date. If, subsequent to the Closing Date, valid claims are made on any contingent 

and unliquidated claim specified in Schedule 2, the Holders of such claims will receive a pro rata distribution of the 

New Bonds.

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$550.

Rounding

The aggregate principal amount of New Bonds issued to each Holder of 

Participating Bond Claims will be rounded up, if necessary, to $1 or the nearest 

whole multiple of $1 in excess thereof. This rounded amount will be the 

principal amount of New Bonds a Holder will receive.

Payments from Available Cash

Payments of principal and interest to holders of New Bonds shall be made 

solely from Available Cash (as defined below) of the Issuer, as provided below.

Security

Pursuant to, or otherwise consistent with, Article 402 of the GDB Restructuring 

Act, as in effect on August 24, 2017, the New Bonds will be secured by a 

statutory lien on the New Bond Collateral, which statutory lien shall occur 

automatically and shall automatically be perfected, valid and binding from and 

after the Closing Date, in any case without any further act or agreement.

The indenture for the New Bonds (the “Indenture”) shall confirm such statutory 

lien and establish that the New Bonds will be secured on a first priority basis 

under the statutory lien.

End of Life Provisions

On or after the final scheduled payment date, the Servicer will be required to 

use its commercially reasonable efforts to liquidate all remaining New Bond 

Collateral, if any, as soon as reasonably practicable but in no event after 

December 31, 2040 unless either (i) all principal, interest and any other 

amounts owing under the New Bonds have been paid or (ii) the New Bond 

Requisite Holders instruct otherwise (subject to the economic feasibility of the 

Servicer continuing to service the remaining New Bond Collateral). The net 

proceeds from such liquidation will constitute collections on the New Bond 

Collateral and, as such, will be distributed in accordance with the priority of 

payments under the Indenture. Following either (i) the payment in full of all 

principal, interest and any other amounts owing under the New Bonds and the 

satisfaction and discharge of the Indenture or (ii) the liquidation of the New 

Bond Collateral and distribution of the proceeds thereof in accordance with the 

foregoing, the Public Entity Trust (as defined below) will succeed to all the 

rights of the Issuer with respect to any remaining assets of the Issuer, if any.

Non-Municipal 

Government Entities 

The following terms and conditions (the “Non-Municipal Government Entity 

Resolution”) relating to Non-Municipal Government Entities (as defined in the 

GDB Restructuring Act) shall be a condition of the Restructuring.

Determination of Liabilities Between Non-Municipal Government Entities and 

GDB

Pursuant to, or otherwise consistent with, Article 302 of the GDB Restructuring 

Act, as in effect on August 24, 2017, effective as of the Closing Date, the 

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balance of liabilities owed between any Non-Municipal Government Entities 

and GDB as of the Closing Date shall be automatically determined by applying 

the outstanding balance of any deposit of a Non-Municipal Government Entity 

against the outstanding balance of any loan of such Non-Municipal 

Government Entity owed to GDB or of any bond or note of such NonMunicipal Government Entity held by GDB as of such date (other than any 

loan, bond or note of a Non-Municipal Government Entity secured by a 

mortgage over real property), as set forth on Schedules 4, 5, 6, and 7, without 

the need for any further action. Such application shall be effected by reducing 

any remaining installments of principal in inverse order of maturity and shall 

not otherwise affect the repayment schedule of the corresponding bond, note or 

loan. For purposes hereof, all agencies, departments, offices and 

instrumentalities of the central government shall be deemed to be the same 

Government Entity (as defined in the GDB Restructuring Act). The remaining 

balances of the bonds, notes or loans and of the deposits of the Non-Municipal 

Government Entities shall be those certified by AAFAF.

Public Entity Trust 

Pursuant to, or otherwise consistent with, Article 301 of the GDB Restructuring 

Act, as in effect on August 24, 2017, GDB shall execute a deed of trust (the 

“Public Entity Deed of Trust”) to create and establish a trust (the “Public Entity 

Trust”) for the benefit of (a) those Non-Municipal Government Entities having 

claims in respect of funds on deposit at GDB as of the Closing Date, after 

giving effect to the transactions described above in “Determination of 

Liabilities Between Non-Municipal Government Entities and GDB,” identified 

on Schedule 6 hereto (such entities, the “Designated Depositors”) and (b) those 

municipalities with federal funds deposited at GDB listed on Schedule 9. 

Pursuant to, or otherwise consistent with, Article 303 of the GDB Restructuring 

Act, as in effect on August 24, 2017, effective as of the Closing Date, GDB 

shall transfer the assets currently owned by GDB and identified on Schedule 7 

hereto (the “Public Entity Trust Assets”) to the Public Entity Trust. A transfer 

of the Public Entity Trust Assets by GDB to the Public Entity Trust pursuant to 

the Public Entity Deed of Trust shall be treated as an irrevocable, non-voidable 

and absolute transfer of all of GDB’s legal and equitable right, title and interest 

(as a true sale), and not a pledge or other financing, of the Public Entity Trust 

Assets. Upon the transfer of the Public Entity Trust Assets to the Public Entity 

Trust and the assumption by the Public Entity Trust of the Designated 

Depositors’ deposits, the Designated Depositors shall, immediately and forever, 

and without further actions or documentation, cease to have any right, interest 

or claim against GDB or any of its assets, or any successors or assigns thereof 

(other than the Public Entity Trust). 

Certain Municipal Issues Excess CAE Settlement

If a municipality that has Excess CAE (as defined in the GDB Restructuring 

Act, as in effect on August 24, 2017) executes a settlement agreement with 

GDB providing a release (substantially similar to the release provided under 

Article 702 of the GDB Restructuring Act, as in effect on August 24, 2017, but 

effective as of the effective date of the settlement agreement) of all claims and 

causes of action (other than a claim for a Participating Bond Claim, if any) 

against GDB and the Issuer and agreeing not to challenge or otherwise take any 

action that is inconsistent with, or that would reasonably be expected to 

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prevent, interfere with, delay or impede the consummation of, the 

Restructuring, then, promptly upon the effective date of such settlement 

agreement, if so provided pursuant to an amendment to the GDB Restructuring 

Act, GDB shall pay, in cash, to such municipality an amount equal to 55% of 

the undisbursed Excess CAE corresponding to such municipality. 

In the case of such municipalities that have Excess CAE but which do not 

execute a settlement agreement with GDB prior to the Closing Date, pursuant to 

Article 502 of the GDB Restructuring Act, as in effect on August 24, 2017, 

GDB shall pay to such municipality on the Closing Date, in cash, an amount 

equal to 55% of the undisbursed Excess CAE corresponding to such 

municipality. 

Upon the effective date of a settlement agreement entered into by a 

municipality as described above or, in the case of municipalities that do not 

execute such a settlement agreement, upon the Closing Date, the remaining 

portion of such municipality’s undisbursed Excess CAE shall be discharged, 

and such municipality shall have no further rights or claims thereto, and GDB 

shall have no further liability or obligation to such municipality in respect of the 

Excess CAE. 

Recalculation of Certain Municipal Obligations

The principal amount of any bond, note and/or loan of any municipality of 

Puerto Rico held by GDB as of the Closing Date shall be automatically 

reduced by operation of law, effective as of the Closing Date, without the 

need for any further action, by an amount equal to the balance of proceeds 

of such bond, note and/or loan that were not disbursed to such municipality 

and were held on deposit at GDB on the Closing Date pursuant to the 

Municipal Financing Act, Act 64-1996, as amended. Such application shall 

be effected by reducing any remaining installments of principal in inverse 

order of maturity and shall not otherwise affect the repayment schedule of 

the corresponding bond, note or loan.

Any remaining municipal deposits held at GDB as of the Closing Date shall 

be reduced, effective as of the Closing Date, on a dollar-for-dollar basis, 

from the outstanding principal amount of any corresponding bond, note 

and/or loan (excluding the loans that are collateral for the Secured Deposit 

Account), relative to the type of corresponding deposit (CAE deposits 

against CAE loans, IVU deposits against IVU loans, and all undesignated 

deposits against outstanding principal balance of other loans in the 

following order: operational loans, revenue loans, IVU loans, then CAE 

loans). Such application will be effected in ascending order of outstanding 

loan balances. In cases where deposits are not enough to pay a loan in full, 

the application shall be effected by reducing installments of principal in 

inverse order of maturity without affecting the repayment schedule of the 

bond, note or loan. The remaining balances of the municipal loans shall be 

those certified by AAFAF, and all future payments of interest on such 

bonds, notes and/or loans shall be computed based on such balances.

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Terms of New Bonds Payment of Interest from Available Cash

7.500% annual coupon rate, payable semiannually in cash; provided that, if 

on any “Determination Date” (a date not more than 10 business days prior 

to the related interest payment date) in respect of the related interest 

payment date, Available Cash is not sufficient to pay in full all interest then 

payable on the New Bonds (including paid in kind interest outstanding at 

such time), such interest on the New Bonds shall be paid in cash pro rata to 

the extent of Available Cash and any unpaid balance of accrued current 

interest shall be paid in kind. All outstanding paid in kind interest 

(including any interest accrued thereon) shall be due and payable, together 

with other accrued interest on the New Bonds, on each interest payment 

date (subject to the above provisions if Available Cash is then insufficient 

to make such payments in cash) until such paid in kind interest is paid in 

full.

Amortization on Closing Date

Any Available Cash of the Issuer as of the Closing Date shall be paid to the 

holders of, and used to reduce, the principal balance of, the New Bonds on 

the Closing Date or as soon as practicable thereafter but in no event later 

than 5 business days following the Closing Date.

Amortization from Excess Available Cash

On each Determination Date in respect of the related interest payment date, 

if Available Cash of the Issuer exceeds the amount thereof to be used to pay 

interest, including all outstanding paid in kind interest, on the New Bonds 

on such interest payment date, such excess amount of Available Cash 

(“Excess Available Cash” on such interest payment date) shall be used to 

amortize the unpaid principal of the New Bonds.

Collateral Priority

The New Bonds will be automatically secured by a first priority perfected, 

valid and binding statutory lien on the New Bond Collateral.

Maturity

August 20, 2040

New Bond Collateral The “New Bond Collateral” shall include all legal and equitable right, title and 

interest in and to the Recovery Authority Assets (as defined below) (including, 

without limitation, the Beneficial Interest (as defined below) in property of 

GDB, the proceeds of which are required to be transferred to the Issuer) and all 

assets, collections, fees, charges, proceeds, revenues, rents, insurance payments, 

income or other funds generated by, or received by the Issuer, the Servicer or 

GDB in respect of, the Recovery Authority Assets, including in respect of the 

administration or reinvestment thereof.

The “Recovery Authority Assets” shall include all legal and equitable right, 

title and interest in and to (i) all assets of GDB that are in existence as of the 

Closing Date (whether or not identified on the Closing Date), other than the 

Excluded Assets (as defined below), including, without limitation, (a) the 

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public sector and municipal loans, advances to the Municipal Administration 

Fund and Municipal Financing Corporation, and GDB assets and properties 

identified in Schedule 3 and Schedule 4 hereto and (b) all unrestricted cash and 

cash equivalents of GDB in excess of the Specified Cash Assets (as defined 

below); (ii) the Beneficial Interest (as defined below) in, and the proceeds of, 

the public entity loans listed on Schedule 5 held at GDB, (iii) upon the date on 

which GDB is required, or chooses at its option, to transfer any public entity 

loan listed on Schedule 5, such public entity loan to be transferred; (iv) the 

Beneficial Interest in, and the proceeds of, any causes of action (other than 

causes of action to enforce loans that constitute Public Entity Trust Assets), 

including contingent or unknown causes of action and (v) all proceeds of any of 

the foregoing.

“Excluded Assets” means (i) the public entity loans listed on Schedule 5 held at 

GDB, provided that the Beneficial Interest in, and the proceeds of, such public 

entity loans shall be Recovery Authority Assets, provided further that if GDB, 

at its option, transfers to the Issuer any such loans at any time, such transferred 

loans shall be deemed to be Recovery Authority Assets upon such transfer, and 

provided further that each of the Performing Additional Loans (as defined 

herein) shall be deemed to be Recovery Authority Assets on the date that is the 

earlier of (x) the effective date of a modification, restructuring or similar 

transaction in respect of such Performing Additional Loan and (y) eighteen 

months after the Closing Date; (ii) cash to pay any transaction costs of the 

Restructuring, including professional fees and expenses of GDB, AAFAF, and 

the professionals to be paid pursuant to the RSA; (iii) causes of action, 

including contingent or unknown, held by GDB as of the Closing Date,

provided that the Beneficial Interest in, and the proceeds of, such causes of 

action shall be Recovery Authority Assets; (iv) Public Entity Trust Assets; 

(v) loans and funds that are collateral for the Secured Deposit Account (as 

defined below); (vi) the Specified Cash Assets, to be retained by GDB, 

provided that the Vendor Claim Reserve Residual shall not constitute Excluded 

Assets but shall constitute Recovery Authority Assets; and (vii) office furniture, 

equipment and other supplies owned by GDB and used in the ordinary course 

of GDB’s business (excluding all such property relating to the real property 

assets that are Recovery Authority Assets). 

The “Specified Cash Assets” shall equal the sum of (a) the Vendor Claim 

Reserve (as defined below), other than the Vendor Claim Reserve Residual, 

(b) restricted cash held by GDB,4 and (c) $28.9 million or such other amount 

for operating cash requirements of GDB as may be acceptable to the RSA 

Requisite Bondholders; provided that the Vendor Claim Reserve Residual shall 

constitute Recovery Authority Assets and, once identified, such Vendor Claim 

Reserve Residual shall be delivered to the Issuer as set forth below.

The “Vendor Claim Reserve Residual” shall be the amount equal to any cash or 

cash equivalents remaining in the account in respect of the Vendor Claim 

 

4 Restricted cash includes cash held in a segregated account separate from Available Cash, in an aggregate amount 

of approximately $22 million, for (i) the Employee’s Incentive, Retirement and Retraining Program established 

under Act 70-2010; (ii) employee benefits under the early retirement windows of 1994, 2000 and 2007; (iii) the 

Voluntary Pre-Retirement Program established under Act 211-2015; (iv) the voluntary separation program included 

in GDB’s certified fiscal plan; and (v) AAFAF’s Administrative Order OA-2017-05.

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Reserve after the payment of all Open or Disputed Vendor Claims (as defined 

below) determined by GDB to be valid. Any cash or cash equivalents related 

thereto shall be transferred to the Issuer after such determination as part of the 

Recovery Authority Assets.

“Beneficial Interest” means the beneficial interest in, and the right to receive 

the proceeds (net of expenses associated with realizing such proceeds) of, in 

each case, after giving effect to the rights of GDB as set forth herein, as 

applicable, (i) causes of action, including contingent or unknown, held by GDB, 

provided that GDB shall have no duty to pursue any such causes of action and 

shall have the absolute discretion to settle, offset, or release such causes of 

action, or (ii) public entity loans listed on Schedule 5 held at GDB; provided, in 

the case of both (i) and (ii), that GDB shall have no duties in respect of the 

Issuer or the holders of the New Bonds except to the extent set forth in this 

Term Sheet or the Definitive Documents.

The Recovery Authority Assets shall be irrevocably assigned and transferred to 

the Issuer on the following dates in the following manner (for the avoidance of 

doubt, references below to “transfer” shall refer to an irrevocable assignment 

and transfer:

 All Recovery Authority Assets in existence on the Closing Date shall 

be transferred to the Issuer on the Closing Date. 

 Any unknown assets that constitute Recovery Authority Assets in 

existence on the Closing Date shall be transferred to the Issuer on the

Closing Date with all other Recovery Authority Assets then in 

existence, and upon discovery of any such unknown assets, GDB shall 

take any necessary steps to complete the transfer thereof to the Issuer 

within 15 days, pending which such assets shall be held in trust for the 

Issuer.

 Each of the Performing Additional Loans may be transferred to the 

Issuer at any time and shall be transferred to the Issuer upon the earlier 

of (a) the effective date of a modification, restructuring or similar 

transaction in respect of such loan and (b) eighteen months after the 

Closing Date.

 GDB may, at its option, transfer to the Issuer any of the public entity 

loans listed on Schedule 5, other than the Performing Additional 

Loans, at any time, at which time such transferred loans shall be 

deemed to be Recovery Authority Assets.

 To the extent that any cash that constitutes Excluded Assets remains at 

GDB after payment of the obligations provided for herein, such cash 

shall become Recovery Authority Assets and, as such, shall be 

transferred to the Issuer.

 Any other Recovery Authority Assets not transferred to the Issuer on 

the Closing Date and not otherwise provided for above, including, but 

not limited to, the Vendor Claim Reserve Residual and the proceeds of 

(i) any causes of action in existence on the Closing Date and (ii) the 

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public entity loans identified on Schedule 5 held at GDB (in each case, 

net of the expenses associated with obtaining such proceeds) shall be 

delivered to the Issuer within 15 days after such assets are received by 

GDB or otherwise become known and identifiable.

All proceeds of New Bond Collateral, whenever received and including without 

limitation cash payable to the Issuer in respect of loans and advances included 

in the New Bond Collateral, will remain in the ownership and control of the 

Issuer, subject to a perfected, valid and binding statutory lien securing the New 

Bonds.5

The Issuer (and the Servicer on behalf of the Issuer) and GDB shall be 

obligated, limited and empowered, as applicable, in respect of the management 

of the New Bond Collateral as follows: 

 Neither the Issuer (nor the Servicer nor any other entity on behalf of 

the Issuer) may dispose of any municipal loans listed on Schedule 3 

without the consent of AAFAF or any other agent designated by the 

Commonwealth, which entity may take into account the public policy 

goals of the Commonwealth, which consent shall not be unreasonably 

withheld (taking into account such goals). 

 The Issuer (and the Servicer on behalf of the Issuer) shall have all 

rights and powers of GDB6in respect of the municipal loans listed on 

Schedule 3, other than as specified in the immediately foregoing bullet.

 The Issuer (and the Servicer on behalf of the Issuer) shall have the 

right to exercise remedies in respect of the public entity loans held by 

the Issuer listed on Schedule 4, but solely to the extent necessary to 

assure that funds from those entities that are available for debt service, 

in accordance with and pursuant to applicable loan documents, 

Oversight Board-approved fiscal plans (if any) and Oversight Boardapproved budgets (if any), are applied to such loans in accordance with 

the legal priority, security or other pledge rights benefiting such loans. 

Furthermore, the Issuer (and Servicer on behalf of the Issuer) will be 

entitled to rights and remedies necessary to preserve, protect or defend 

any security or other pledge rights benefiting such loans. In furtherance 

of the foregoing, for any such loan where the obligor on such loan is in 

Title III or Title VI proceedings and such obligor has other creditors 

that have the same legal priority, security and pledge rights as the 

Issuer, the Issuer will be entitled to rights and remedies necessary to 

ensure that the Issuer receives treatment in such proceedings that is the 

 

5 This presumably will be arranged through accounts maintained by the trustee. As noted above, proceeds of New 

Bond Collateral previously directed to GDB will have to be paid directly to the Issuer or the Servicing Agent 

pursuant to any necessary agreements or legislation.

6 The current interest rates of the loans that are Recovery Authority Assets will not be changed prior to the Closing 

Date and, after the Closing Date, GDB’s bestowed power, as the former fiscal agent to the Commonwealth, to make 

upward adjustments to the interest rates shall be retained and not be transferred upon the transfer of the Recovery

Authority Assets to the Issuer. For the avoidance of doubt, GDB agrees it will not make any downward adjustment 

in interest rates applicable to such loans, whether prior to or after the Closing Date. 

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same as that provided to other creditors that have the same legal 

priority, security and pledge rights.

 The Issuer (and the Servicer on behalf of the Issuer) may sell the assets 

listed on Schedule 4 if such sale is consistent with the servicing 

standards set forth in the Servicing Agreement. 

 Any modification by GDB (or any entity on behalf of GDB) of the 

Center for Municipal Revenue Collection ($106 million) loan, the 

University Medical Services ($10 million) loan, and the Economic 

Development Bank (~$7 million, excluding ~$35 million deposit) loan, 

each as listed on Schedule 5 (collectively, the “Performing Additional 

Loans”) shall (i) not include any provision that would result in the 

removal of any lien, security or other pledge rights benefiting such 

loan except to the extent required for the sale of any such collateral 

where the proceeds of that collateral will be immediately made 

available to the Issuer and (ii) be approved by the financial advisor to 

the Ad Hoc Group (as defined in the RSA) or, if such modification 

occurs after the Closing Date, the Servicer as commercially reasonable 

(provided, for the avoidance of doubt, that the Servicer’s approval of 

such modification may only be given after the Collateral Monitor has 

received 10-days’ notice of the approval of the modification and has 

not objected).

 In respect of the public entity loans listed on Schedule 5 held at GDB, 

GDB shall have a contractual duty to (a) use commercially reasonable 

best efforts to maximize the return on such loans, provided that it shall 

not be required to bring any action seeking to obtain a judgment 

against such public entity or seeking to foreclose upon any of its assets 

except, in each case, insofar as is necessary to preserve the payment or 

lien priority or rights in respect of such loans and (b) provide the 

Issuer, the Servicer and the Collateral Monitor with all material 

communications and other materials relating to any modification, 

restructuring or similar transaction in respect of such loans.

 In respect of the causes of action referenced in clause (iv) of the 

definition of “Recovery Authority Assets,” none of the Issuer, the 

Servicer, the Indenture Trustee or any other party (other than GDB) 

shall have the right to commence or direct any litigation or other 

enforcement action in respect of, or sell, transfer or dispose of such 

causes of action.

Events of Default / 

Acceleration

“Events of Default” in respect of the New Bonds shall include the following:

 Failure by the Issuer to accrue any paid in kind interest as required or 

to make any required payment from Available Cash in respect of any 

of the New Bonds, on the date on which the same is due;

 After written notice by the Indenture Trustee or the holders of New 

Bonds holding not less than 25% of the aggregate principal amount of 

the New Bonds then outstanding, a failure by the Issuer to observe or 

perform any covenant or agreement contained in the Indenture, and 

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such failure continues or is not cured for a period of 60 days;

 Any insolvency, bankruptcy, reorganization, restructuring, receivership 

or any other form of debtor relief is sought by or against the Issuer, 

whether under federal or Puerto Rico law;

 Any legislation is enacted, governmental7 action is taken, or any party 

(other than an obligor under the New Bond Collateral) is determined 

by a final, nonappealable order or admitted in writing by the Issuer to 

have rights that, in any such case, adversely affects (i) the receipt of 

current or future proceeds of the New Bond Collateral to which the 

Issuer is entitled (other than by reason of (A) a failure, delay or default 

of the obligor under such New Bond Collateral, (B) an obligor being 

subject to a proceeding under PROMESA or to any provision thereof, 

or (C) changes in taxation or restrictions on the enforcement of rights 

or remedies, so long as such changes or restrictions are not directed 

solely at the Issuer, the New Bond Collateral, the New Bonds or the

holders of New Bond relative to any other entity, asset, security or 

security holder) in respect of assets having an aggregate value on the 

Closing Date of $25 million or more8 or (ii) the binding effect or 

enforcement in accordance with their respective terms of the GDB 

Restructuring Act, the Qualifying Modification, Non-Municipal 

Government Entity Resolution, the Indenture, the New Bonds or the 

liens on the New Bond Collateral;

 Entry of a judgment against the Issuer in the amount of $10 million or 

more; 

 The occurrence of a default by GDB under the transfer agreement 

pursuant to which GDB is to transfer to the Issuer the Recovery 

Authority Assets, which default is continuing and is not cured for a 

period of 10 days, after notice or discovery; 

 The Issuer permits the validity or effectiveness of the Definitive 

Documents to be impaired or any person to be released from any 

covenants or obligations with respect to the New Bonds; and

 Other customary events of default.

If an Event of Default occurs and is continuing, at the request of holders of at 

least 25% in aggregate principal amount of all New Bonds, subject to 

customary provisions related to rights of the Indenture Trustee, the Indenture 

Trustee shall, by notice to the Issuer and the Servicer, declare the outstanding 

principal amount of all the New Bonds to be immediately due and payable.

In addition, if an Event of Default occurs and is continuing, or the Issuer fails to 

 

7 Governmental action for these purposes shall include the government of Puerto Rico, its instrumentalities and any 

government-controlled or managed entities, including entities with directors or management controlled or appointed 

by the government of Puerto Rico.

8 The value of an asset for this purpose is the face amount of such asset (in the case of loans) or the book value of 

such asset (in the case of other assets).

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pay all outstanding amounts on the New Bonds by the final scheduled payment 

date, the Indenture Trustee may, or upon the direction of holders of at least 25% 

in aggregate principal amount of all New Bonds, will, apply to any 

Commonwealth or Federal court of competent jurisdiction in Puerto Rico for 

the appointment of a receiver for the Issuer. Such receiver so appointed will 

have, hold, use, operate, manage, and control the New Bond Collateral for the 

benefit of the holders of the New Bonds and will exercise all the rights and 

powers of the Issuer with respect to such New Bond Collateral as the Issuer 

itself might do. Such receiver will act under the direction and supervision of the 

court and will at all times be subject to the orders and decrees of the court and 

may be removed thereby.

Covenants The Indenture shall contain covenants in form and substance acceptable to the 

RSA Requisite Bondholders, including covenants regarding the Servicer, 

information, budgeting, collateral management, negative pledge, further 

assurances, permitted business activities, limitation on assets sales, limitation 

on investments, limitations on indebtedness and other customary covenants.

Among other things, the covenants will provide that:

1. The Issuer shall enter into a continuing disclosure agreement that 

requires, no less than annually, the Issuer to provide or cause to be 

provided audited annual reports to the holders of New Bonds9

regarding the assets, liabilities and cash flows of the Issuer, as well as 

other financial information, in each case in form and substance as 

specified in the continuing disclosure agreement (provided, however, 

that a breach of this covenant will not result in an Event of Default 

under the Indenture). 

a. The continuing disclosure agreement shall require the Issuer to 

provide or cause to be provided to the holders of New Bonds, 

not later than a specified date prior to the beginning of each 

fiscal year, a detailed annual operating budget indicating the 

Issuer’s good faith projection of monthly operating 

expenditures of the Issuer for the upcoming fiscal year. 

b. In addition, the continuing disclosure agreement shall require 

the Issuer to provide or cause to be provided to the holders of 

New Bonds, (i) a quarterly update of the year’s operating 

budget to show actual expenditures for the quarter(s) then 

ended, and projected expenditures for the remainder of the 

fiscal year, reconciled to the previously posted budget for such 

periods, (ii) a semiannual report of the Collateral Monitor 

regarding the Compliance Test (as defined below), the 

Servicer’s performance and compliance with the applicable 

servicing standards, any material actions taken with regard to 

the New Bond Collateral and any actions taken with regard to 

non-performing loans and (iii) information as reasonably 

 

9 The first audited reports of the Issuer shall be provided within 180 days after the end of the Issuer’s first fiscal year 

ending after the Closing Date. Reports to holders of New Bonds may be provided through appropriate web posting 

in a form to be agreed. 

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requested by any holder of New Bonds for U.S. tax reporting 

purposes. 

c. The continuing disclosure agreement will also require the 

Issuer to provide or cause to be provided any further 

disclosures, if any, required in connection with any required 

compliance with Rule 15c2-12 under the Securities Act as 

requested by the participating underwriter(s), if any.

2. The Issuer shall not sell, transfer, encumber, exchange, otherwise 

dispose of, or waive any rights with respect to, any of the assets of the 

Issuer, including any of the New Bond Collateral, other than as 

directed by the Servicer.

3. The Issuer shall not claim any credit on or make any deduction from 

the principal and interest payable in respect of the New Bonds or assert 

any claim against any present or former holder of the New Bonds 

because of the payment of taxes levied or assessed upon the Issuer.

4. The Issuer shall not dissolve or liquidate in whole or in part.

5. The Issuer shall not incur current expenses or any other obligations 

exceeding, in the aggregate, a cap to be agreed upon by the RSA 

Requisite Bondholders and AAFAF in any year other than, among 

other things to be agreed upon by the RSA Requisite Bondholders and 

AAFAF, (a) in respect of the New Bonds, (b) amounts to be paid to 

professionals pursuant to the Restructuring Support Agreement, 

(c) amounts owed to the Servicer, Indenture Trustee and Collateral 

Monitor and (d) expenses arising from (i) any bondholder solicitation 

required under the terms of the Indenture, (ii) any litigation or 

investigation, brought against or reasonably brought by the Issuer or 

the Board of Trustees (as defined below) (including any related 

indemnification costs) or (iii) any request by a holder of New Bonds 

for information for U.S. tax reporting purposes. Such cap shall be 

subject to customary annual inflation adjustments.

6. The Issuer shall not permit any lien, charge, excise, claim, security 

interest, mortgage or other encumbrance to be created on, or extend to 

or otherwise arise upon or burden, the assets of the Issuer or any part 

thereof, or any interest in the assets of the Issuer or the proceeds 

thereof other than the liens on the New Bond Collateral securing the 

Indenture and the obligations of the Issuer under the New Bonds, the 

Indenture and any related documents or instruments.

7. The Issuer shall comply in all material respects with its obligations 

under the Definitive Documents, including the transfer agreement, the 

Servicing Agreement and the Collateral Monitor Agreement.

Structure and 

Governance of Issuer

Approval of Structure and Governance of Issuer. The structure and governance 

of the Issuer, the form of Indenture for the New Bonds and other related 

documents, and the identity and terms of employment of the initial Collateral 

Monitor and the initial Servicer shall be acceptable to the RSA Requisite 

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Bondholders, AAFAF, and GDB.

Board of Trustees of the Issuer. The Issuer shall be managed by a board of 

trustees (the “Board of Trustees”) initially composed of David Pauker, Matthew 

Karp and Jorge Padilla. Each member of the Board of Trustees is 

(i) appointed for a three-year term and may serve for consecutive terms as 

an appointed member, and (ii) entitled to one vote. In the event of a 

vacancy, the Governor will appoint a successor that meets the independence 

and qualification standards set forth in the Definitive Documents, including 

that no member of the Board of Trustees may be an officer, employee or 

director of the government of Puerto Rico or any instrumentality thereof 

(other than the Issuer) and must have executive experience in finance or 

with respect to assets like the New Bond Collateral and be otherwise 

qualified to serve on the Board of Trustees. 

Cash Flow Tests for Compliance. GDB has delivered a schedule of contracted 

cash flows of municipal loan interest and amortization through 2040 (the “Cash 

Flow Schedule”) exhibited hereto as Schedule 8. The Servicer will provide a 

semiannual report to the Collateral Monitor with updated municipal loan 

interest collections and amortization collections to be used for testing purposes 

on a semiannual basis (the date of each such report, a “Test Date”) for purposes 

of the Collateral Monitor’s semiannual report of compliance with the 

Compliance Test, as provided above. If the cumulative shortfall of the actual 

municipal loan portfolio cash flows as compared to the scheduled cash flows in 

the Cash Flow Schedule from the most recent payment date in respect of such 

municipal loans prior to the Closing Date through the Test Date is 10.0% or 

more (the “Compliance Test”) as of any Test Date, a default by the Servicer 

under the Servicing Agreement shall have occurred.

Collateral Monitor Consent Rights. The Collateral Monitor shall be given not 

less than ten days’ prior written notice of any material modification, extension, 

accommodation or disposition of any New Bond Collateral, and such 

transaction may be entered into (or approved) by the Issuer (or the Servicer or 

any other entity on behalf of the Issuer) only if, after the end of such ten-day 

period, the Collateral Monitor has not reasonably objected to such transaction 

on the grounds that such transaction is not commercially reasonable. At the 

time of delivery of such written notice by the Servicer, the Collateral Monitor 

shall be provided with access to the Servicer and all information necessary in 

order to make a determination as to the commercial reasonableness of such 

modification, extension, accommodation or disposition, but the Collateral 

Monitor will have no right to participate in discussions or negotiations (in any 

form) with obligors under the New Bond Collateral.

Replacement of the Servicer. Subject to the procedures set forth below, the 

Servicer may be removed and replaced by the holders of New Bonds upon the 

occurrence of a default under the Servicing Agreement that is material to the 

interests of holders of New Bonds (a “Servicer Replacement Event”). The 

Collateral Monitor shall notify the holders of the New Bonds when (a) the 

Collateral Monitor believes, in good faith, that a default by the Servicer under 

the Servicing Agreement has occurred and is continuing and (b) the Collateral 

Monitor believes, in its sole discretion, that such default is material to the 

interests of bondholders. Defaults under the Servicing Agreement shall include, 

without limitation, (i) cause, as set forth under the terms and conditions of the 

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Servicing Agreement, (ii) failure to meet the Compliance Test, (iii) failure to 

timely deliver the information necessary to verify the Compliance Test, (iv) 

failure to use commercially reasonable efforts to maximize the value of the 

New Bond Collateral (subject to any restrictions included in the Servicing 

Agreement, as set forth in this Term Sheet) and (v) entering into any 

modifications, extensions or accommodations in respect of the New Bond 

Collateral that are, individually or in the aggregate, not commercially 

reasonable10 (subject to any restrictions included in the Servicing Agreement, as 

set forth in this Term Sheet). Such notice from the Collateral Monitor shall give 

a detailed narrative and explanation of (i) the facts sustaining the evaluation of 

the Collateral Monitor, (ii) the possible effects to the interests of the holders of 

New Bonds, (iii) the recommendation of the Collateral Monitor regarding a 

possible Servicer Replacement Event and (iv), if the Board of Trustees chooses, 

the recommendation of the Board of Trustees regarding a possible Servicer 

Replacement Event. Concurrently with the notice of a possible Servicer 

Replacement Event, the Issuer shall issue a posting on the Electronic Municipal 

Market access website or other similar public posting and a bondholder vote 

shall be solicited regarding whether a Servicer Replacement Event has occurred 

and, as a consequence, the Servicer should be replaced. If holders of one-third 

of the aggregate principal amount of the New Bonds then outstanding (or, if an 

event of default under the New Bonds has occurred and is continuing, holders 

of 25% of the aggregate principal amount of the New Bonds then outstanding) 

vote that a Servicer Replacement Event has occurred and the Servicer should be 

replaced, the Issuer shall initiate a competitive process, reasonably satisfactory 

to the Collateral Monitor, for the identification of a possible successor Servicer, 

who must be a “qualified” and “independent” (as such terms are defined in the 

Definitive Documents) successor Servicer of recognized national standing with 

the requisite expertise and Spanish speaking capability. The Issuer (or, if the 

Issuer fails to act within 45 days, the Collateral Monitor11) shall then designate 

a successor Servicer acceptable to the Collateral Monitor for a preliminary 60-

day period on terms acceptable to the Collateral Monitor. Any approval of the 

successor Servicer or terms of its engagement required from the Collateral 

Monitor shall not be unreasonably withheld. The Collateral Monitor will then 

give notice to the bondholders of (i) the successor Servicer, (ii) the terms of the 

successor Servicer’s engagement, (iii) any additional information the Collateral 

Monitor would like to provide and (iv) any additional information the Issuer 

would like to provide. If holders of one-third of the aggregate principal amount 

of the New Bonds then outstanding (or, if an event of default under the New 

Bonds has occurred and is continuing, holders of 25% of the aggregate 

principal amount of the New Bonds then outstanding) do not object to the 

identity or terms of the successor Servicer’s engagement within 60 days, the 

successor Servicer’s engagement shall become final, subject to the terms and 

conditions of such Servicer’s Servicing Agreement.

 

10 If the Collateral Monitor fails to object to a modification, extension or accommodation during the 10 day period 

described elsewhere herein, such modification, extension or accommodation will be presumed to be commercially 

reasonable and will not, individually, be the basis for a default under the Servicing Agreement.

11 If, pursuant to the procedures described herein, the Collateral Monitor assumes the duty to appoint a successor 

Servicer, the Collateral Monitor will make reasonable efforts to consult with the Issuer in appointing such 

Successor. 

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Replacement of the Collateral Monitor. The Collateral Monitor may be 

removed and replaced by the Indenture Trustee for cause and must be removed 

and replaced by the Indenture Trustee at the direction of holders of 25% of the 

aggregate principal amount of the New Bonds then outstanding, in each case, 

which removal decision may be rescinded and annulled by the holders of a 

majority of the aggregate principal amount of the New Bonds then outstanding. 

The identity and terms of engagement of the successor Collateral Monitor must 

be acceptable to the holders of a majority of the aggregate principal amount of 

the New Bonds that vote in a solicitation nominating such successor. 

In all events the Issuer will be structured so as to allow the New Bonds to 

constitute exempt securities under Section 3(a)(2) of the 1933 Act or any other 

applicable exemption.

Vendor Claim Reserve The amount of cash equal to the aggregate amount of claims asserted against 

GDB by parties that provided goods and services to GDB in the ordinary course 

of business (such amount at any time, the “Vendor Claim Reserve”), which 

claims are disputed by GDB on the Closing Date or for which payment has not 

yet become due (“Open or Disputed Vendor Claims”), shall remain at GDB in a 

separate account subject to a perfected security interest in favor of the Issuer 

securing the obligation to transfer to the Issuer the Vendor Claim Reserve 

Residual. Any cash or cash equivalents constituting Vendor Claim Reserve 

Residual remaining in the account in respect of the Vendor Claim Reserve after 

the payment of all Open or Disputed Vendor Claims determined by GDB to be 

valid shall be Recovery Authority Assets and as such shall be required to be 

transferred to the Issuer.

Certain Definitions “Available Cash” of the Issuer on any Determination Date in respect of a 

related interest payment date means all cash and cash equivalents of the Issuer 

(whether arising from proceeds of New Bond Collateral or otherwise) at such 

time, other than amounts owed to the Servicer, the Indenture Trustee and the 

Collateral Monitor and the Issuer Expense Reserve (as defined below) at such 

time.

“Issuer Expense Reserve” of the Issuer on any Determination Date in respect of 

a related interest payment date means the amount of cash reasonably expected 

to be required to pay the operating expenses of the Issuer through the next 

Determination Date based on a good-faith projection prepared by the Servicer.12 

“Pro rata” means, with respect to any cash distribution to holders of New Bonds 

or any vote of holders of New Bonds, a ratable distribution or vote based on the 

principal amount of the New Bonds outstanding at the time of such distribution 

or vote.

“Secured Deposit Account” means an account in the name of Asociación de 

Empleados del ELA (Account Number B6347044) in an amount of 

approximately $25.4 million. 

 

12 A budget shall be prepared subject to the terms of the Servicing Agreement to be agreed upon and acceptable to 

the RSA Requisite Bondholders.

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Voting Unless otherwise specified, amendments, modifications and waivers of the 

governing documents of the New Bonds or other matters requiring the consent 

of the holders of the New Bonds shall generally require the consent of holders 

of not less than a majority of the aggregate principal amount of the New Bonds

then outstanding; provided that amendments and modifications that customarily 

do not require bondholder consent shall be excluded from such consent 

requirement;13 and provided, further that any amendments, modifications or 

waivers that would have the effect on any New Bond of reducing principal, 

extending maturity, reducing the interest rate payable, or adversely affecting 

lien priority or any other amendments, modifications or waivers customarily 

requiring the consent of each adversely affected holder shall require the consent 

of each holder of New Bonds adversely affected by such amendment, 

modification or waiver.

Certification Order GDB shall submit an application to the United States District Court for the 

District of Puerto Rico (or any other court of competent jurisdiction pursuant to 

PROMESA) for an order pursuant to section 601(m)(1)(D) of PROMESA that 

the requirements of section 601 of PROMESA have been satisfied by the 

Qualifying Modification as set forth herein (the “Certification Order”), which 

order shall be in form and substance satisfactory to the RSA Requisite 

Bondholders, and shall provide, among other things, that:

 the Qualifying Modification is valid and binding on any person or 

entity asserting claims or other rights, including a beneficial interest 

(directly or indirectly, as principal, agent, counterpart, subrogee, 

insurer or otherwise) in respect of Participating Bond Claims subject to 

the Qualifying Modification, any trustee, any collateral agent, any 

indenture trustee, any fiscal agent and any bank that receives or holds 

funds related to such Participating Bond Claims;

 the Recovery Authority Assets will vest free and clear of all claims of 

any other issuer pursuant to section 601(m)(2) of PROMESA;

 the Qualifying Modification is full, final, complete, binding, and 

conclusive as to GDB, the Issuer, the Government of Puerto Rico (as 

defined in PROMESA), any other Territorial Instrumentality (as 

defined in PROMESA) of the Government of Puerto Rico and any 

creditors of such entities, and is not be subject to any collateral attack 

or other challenge by any such entities in any court or other forum; and

 the release and exculpation of the Released Parties (as defined below)

by all other Released Parties as provided below is fully-enforceable 

and shall not be subject to attack or avoidance in any other proceeding 

under PROMESA or otherwise.

Conditions Conditions precedent to the Closing Date shall include, but not be limited to, 

 

13 Such as to cure ambiguities or any defective provision in the governing documents, to comply with regulations 

related to the registration of beneficial ownership interests, or to modify or amend the indenture to permit the 

qualification under the Trust Indenture Act, in the case of any of the foregoing, only to the extent that the 

amendment has no adverse effect, whether or not material, on holders of the New Bonds. 

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the following:

 Certification of the Restructuring as a Qualifying Modification 

pursuant to section 601(g)(1)(C) of PROMESA;

 Establishment of one or more Pools of Bond Claims (as defined in 

PROMESA) by the Financial Oversight and Management Board for 

Puerto Rico (the “Oversight Board”) in accordance with the 

requirements of section 601(d)(3) of PROMESA.

 Distribution of the required disclosure documents and voting 

instructions to the Holders by the Information Agent (as defined in 

PROMESA) pursuant to section 601(f) and (k) of PROMESA;

 Satisfaction of the voting requirements set forth in section 601(j) of 

PROMESA with respect to the Qualifying Modification;

 Passage of any additional legislation that may be necessary to enable

the creation of the Issuer in form and substance satisfactory to the RSA 

Requisite Bondholders, and which includes such provisions as may be 

required for consummation of the transactions contemplated by the 

Restructuring and implementing the terms set forth herein, including, 

without limitation, any provisions necessary for (i) the Issuer to be 

treated as a municipal issuer under applicable securities laws, (ii) cash 

flows arising out of the New Bond Collateral to be paid directly (i.e., 

directly from CRIM or any other applicable collection entity) to the 

Issuer from and after the Closing Date, (iii) permitting the bond 

documents to contain remedies for breach as set forth herein, including 

confirming the ability of the holders of the New Bonds to have a 

receiver appointed in accordance with the remedies provisions set forth 

above, and (iv) providing the Issuer with the powers, authorities and 

remedies in respect of the New Bond Collateral as provided herein, and 

such legislation is in full force and effect;

 Certification pursuant to section 601(m) of PROMESA that (i) voting 

requirements have been satisfied, (ii) the Qualifying Modification 

complies with section 104(i)(1) of PROMESA, and (iii) any conditions 

on the effectiveness of the Qualifying Modification have been satisfied 

or waived;

 Entry of the Certification Order;

 The Non-Municipal Government Entity Resolution shall have been 

effectuated, pursuant to, or otherwise consistent with, Chapter 3 of the 

GDB Restructuring Act, and the Public Entity Trust, in form and 

substance satisfactory to GDB and the RSA Requisite Bondholders 

shall have been established and the Public Entity Trust Assets shall 

have been transferred to the trustee of the Public Entity Trust;

 The Issuer shall have been created pursuant to governing documents in 

form and substance satisfactory to GDB and the RSA Requisite 

Bondholders;

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 The Public Entity Deed of Trust and Servicing Agreement shall have 

been executed and delivered, in form and substance satisfactory to 

GDB and the RSA Requisite Bondholders, and shall be in full force 

and effect; 

 All other Definitive Documents shall have been executed and delivered 

in form and substance satisfactory to GDB and the RSA Requisite 

Bondholders, and shall be in full force and effect;14

 GDB shall have determined, and notified the relevant municipalities of, 

the recalculation of municipal obligations, in accordance with the 

provisions set forth above;

 Legal opinions of counsel to GDB in form and substance acceptable to 

the RSA Requisite Bondholders shall have been delivered to the trustee 

or other applicable party regarding the Definitive Documents and the 

Restructuring; and

 All professional fees and expenses required to be paid under the RSA 

on or prior to the Closing Date shall have been paid on or prior to the 

Closing Date.

Keepwell Agreement Upon the exchange of the Participating Bond Claims for the New Bonds, GDB 

will transfer to the Issuer the Recovery Authority Assets and enter into a 

Keepwell Agreement with the Issuer, which will provide that if any New Bond 

Collateral is returned or conveyed to GDB for any reason, or if the transfer 

thereof to the Issuer is deemed invalid or void for any reason, GDB will take 

such steps as may be necessary to irrevocably retransfer or reconvey such New 

Bond Collateral to the Indenture Trustee to be applied to payments in respect of 

the New Bonds in accordance with the terms of the Definitive Documents (or if 

such retransfer or reconveyance violates any law or court order, to take such 

other actions as may be necessary such that the holders of the New Bonds 

receive the economic equivalent thereof), until payment in full of all principal, 

interest and any other amounts owing under the New Bonds with any remaining 

balance delivered to the Issuer.

The Keepwell Agreement will further provide that GDB will indemnify and 

hold the holders of the New Bonds (collectively, the “Indemnified Parties”) 

harmless from and against all damages and losses suffered or incurred by the 

Indemnified Parties as the result of any legislative action or determination by a 

court of competent jurisdiction causing the Qualifying Modification, the New 

Bonds or the rights or liens of the Issuer, the trustee and the holders of the New 

Bonds in respect of the New Bond Collateral or the New Bonds to be impaired, 

rescinded or avoided or otherwise rendered not enforceable in accordance with 

their terms (the “Covered Losses”); provided, that an Indemnified Party shall 

not be entitled to indemnification for Covered Losses if the circumstances 

giving rise to such Covered Losses result from the actions of such Indemnified 

Party. For the avoidance of doubt, it is the intention of the parties that such 

 

14 The Definitive Documents shall include all documents relating to the engagement of the initial Servicer, 

specifying the compensation to which the Servicer will be entitled, all in form and substance acceptable to GDB and 

the RSA Requisite Bondholders.

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#90008132v43

indemnification and hold harmless provision shall give rise to claims in favor of 

the Indemnified Parties against GDB in an amount such that, after giving effect 

to such claims and any distributions thereon, including in any bankruptcy, 

insolvency, receivership or similar proceedings in respect of GDB, the 

Indemnified Parties will be fully compensated for the Covered Losses, subject 

to the proviso in the foregoing sentence.

Under the terms of the Keepwell Agreement, the holders of the New Bonds and 

the Indenture Trustee, for the benefit of the holders of the New Bonds, shall be 

express third-party beneficiaries of the Keepwell Agreement and shall be 

entitled to the rights and benefits thereunder and may enforce the provisions 

thereof, as if they were parties thereto, notwithstanding (i) any waiver or other 

action by the Issuer or (ii) any legislative action or determination by a court 

resulting, in the case of (ii), in the rescission, avoidance or other 

unenforceability of the Qualifying Modification, the New Bonds or the rights or 

liens of the Issuer, the Indenture Trustee or the holders of the New Bonds in 

respect of the New Bond Collateral or the New Bonds.

Releases To the extent permitted by applicable law, the Qualifying Modification shall 

provide for customary releases from GDB, AAFAF, and the Holders (solely in 

their capacity as creditors of GDB and not in their capacity as creditors of any 

other entity) for the benefit of each other and each of their respective current 

directors, managers, officers, affiliates, partners, subsidiaries, principals, 

employees, agents, managed funds, representatives, attorneys, and advisors, 

together with their successors and assigns (collectively, the “Released Parties”).

Governing Law; 

Jurisdiction; Remedies

The New Bonds will be governed and construed in accordance with the laws of 

the State of New York.

Any legal action, suit, or proceeding arising out of or relating to the New Bonds 

brought by any party or its successors or assigns shall be brought in any federal 

district court sitting in Puerto Rico and any appellate court from any thereof or, 

in the event such federal court does not have or accept jurisdiction, a 

Commonwealth court and any appellate court from any thereto.

Remedies may not be exercised against GDB or Issuer in respect of a curable 

breach or violation of the Definitive Documents or the Qualifying Modification 

by such party unless 10 days’ written notice and a request for cure is given to 

such party, and such party fails to cure; provided, however, with respect to 

defaults that are not able to be cured, such notice and opportunity to cure need 

not be given.

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Schedule 1

Title VI Bond Claims

GDB Senior Notes

CUSIP Maturity Principal Amount (1) Coupon (%)

745177CH 12/1/2016 $19,195,000 5.00                                     

745177CJ 12/1/2017 10,635,000                         5.00                                     

745177EN 8/1/2020 433,702,000                       5.50                                     

745177EP 8/1/2025 151,259,000                       5.75                                     

745177ET 8/1/2019 217,715,000                       5.40                                     

745177EU 8/1/2025 96,411,000                         5.75                                     

745177EX 5/1/2016 360,009,671                       4.70                                     

745177FB 8/1/2017 226,855,000                       4.15                                     

745177FC 8/1/2019 174,545,000                       4.50                                     

745177FD 8/1/2021 142,640,000                       4.90                                     

745177FE 8/1/2022 47,465,000                         4.95                                     

745177FF 8/1/2023 540,745,000                       5.00                                     

745177FH 8/1/2026 126,820,000                       5.20                                     

745177FK 8/1/2018 317,935,000                       4.35                                     

745177FM 2/1/2017 250,000,000                       3.88                                     

745177FN 2/1/2019 500,000,000                       4.38                                     

745177GG 5/1/2017 39,990,329                         4.70                                     

GDB Senior Guaranteed Notes 110,000,000                       8.00                                     

$3,765,922,000

Source: Bloomberg

Notes

(1) Includes missed principal payments as of January 2018.

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Schedule 1

Title VI Bond Claims

Entity Balance Post Set‐Off

As of 12/31/2017, Unaudited

Municipalities(1)

Carolina $52,779,154

Fajardo 15,137,902

Hatillo 506,087

Humacao 9,489,880

Lares 1,477,679

Rincon 448,602

Total $79,839,305

Other Deposits / Claims

Bank of New York Mellon as Beneficiary under Letter of Credit re: Puerto 

Rico Ports Authority $190,630,000

PR Science and Technology Trust 95,945,159

Municipal Administration Fund (FAM) 21,746,574

First Bank as Agent for Lenders to CCHPR Hospitality, LLC (Sheraton) 13,630,000

Commonwealth Employees Association (AEELA) (2) 13,622,243

PR Highways and Transportation Authority (HTA) (3)  13,000,000

Puerto Rico Development Fund 11,000,000                        

Cooperative Development and Investment Fund (FIDECOOP) 7,899,509

PREPA Pension System 4,134,515

Serralles / Costa Sur / Costa Caribe 3,015,914

MCS Advantage Inc. 615,276

Citibank 612,372

Medical Card System Inc 410,899

Caguas Coop 200,000

Cooperativa Dr. Manuel Zeno Gandia 51,872

Banco Cooperativo (Cooperative Bank) 3,678

A.T/V.Suarez 3,121

Poultry Products of the Caribbean 275

Indulac                                      133

Institutional Trust of Puerto Rico's National Guard 2

Total $376,521,540

Notes

(1)  Pursuant to the GDB Restructuring Act, deposits of municipalities are net of (1) Excess CAE (as defined in the GDB 

Restructuring Act) and (2) full municipal deposits are applied against municipal loans, after corresponding escrow 

deposits to escrow loans, relaƟve to the type of corresponding deposit. (CAE Deposits against CAE Loans, IVU 

Deposits against IVU Loans, with all undesignated deposits applied to outstanding principal balances in order of 

Operational, Revenue, IVU, then CAE). Deposit balances are applied against the corresponding loan types in 

ascending order of outstanding balances. 

(2)  Excludes $13.1 m in deposits secured by five municipal CAE loans excluded from the Issuer Collateral; refer to

Schedule 3.

(3)  Account established at GDB in the name of HTA to deposit certain proceeds (the “Deposits”) of a loan HTA 

requested to make certain payments to Siemens Transportation Partnership Puerto Rico, S.E. (“Siemens”) and 

others pursuant to a Settlement Agreement dated May 29, 2010 between HTA, Siemens, Alternate Concepts, Inc., 

and J.R. Requena & Associates.  Siemens asserts entitlement to the Deposits, relying on a Second Settlement

Amendment to Settlement Agreement between HTA and Siemens dated June 5, 2017 and/or a Guaranty 

Agreement by and between Siemens and GDB.  GDB reserves all rights to dispute Siemens’ claims to the Deposits, 

including any portion thereof.

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Schedule 2

Contingent and Unliquidated Title VI Bond Claims

Entity

PR Public Finance Corporation Stand‐By Letter of Credit(1)

Lehman Brothers Special Financing, Inc. ‐ Debt Service Deposit Agreement(2)

Notes

(1)  Represents a stand‐by letter of credit (the “Stand‐by LOC”) for the benefit of Puerto Rico Public Finance

Corporation 2011 Series A and B Bonds and 2012 Series A Bonds (the “Bonds”). The Stand‐by LOC does not have an 

impact on GDB’s financial condition. The Trustee for the Bonds may only draw from the Stand‐by LOC when the 

following conditions exist: (i) a budget for a new fiscal year is not approved  and adopted, and (ii) a legislative 

appropriation for the current fiscal year exists and is lower than the debt service payment due on the Bonds for 

the next fiscal year for which a new budget is not adopted. In such an instance, the Stand‐by LOC may be drawn in 

the amount that the debt service on the Bonds for the upcoming fiscal year is higher than the appropriated 

amount for debt service on the Bonds during the current fiscal year, if any.  The Stand‐by LOC is not intended to

and does not cover the risk that no appropriation is made by the  Legislature of Puerto Rico for any particular fiscal 

year, or that an appropriation is made in an amount  lower than the amount of debt service on the Bonds due with 

respect to any fiscal year. If the budget for any fiscal year is adopted but no appropriation for the payment of the

Bonds is included in such budget, or an appropriation is made in an amount lower than the amount of debt

service on the Bonds, the Trustee may not make a drawing under the Stand‐by LOC.

(2)  The Commonwealth, GDB, and Lehman Brothers Special Financing, Inc. (“Lehman”) are parties to a Debt Service 

Deposit Agreement (the “DSDA”).  Under the DSDA, the Commonwealth made deposits to a “Redemption Fund” 

in an amount sufficient to make debt service payments on the Commonwealth’s General Obligation Bonds.

If the DSDA is breached, the Commonwealth and GDB are jointly liable to Lehman for a termination amount, 

calculated pursuant to the terms of the DSDA. However, the DSDA provides that Lehman must first pursue

remedies against the Commonwealth prior to pursuing remedies against GDB and that GDB shall not be required

to make a payment under the DSDA unless the Commonwealth has, among other things, repudiated the DSDA

or raised a defense of immunity.

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Schedule 3

Issuer Collateral ‐ Municipal Loans

Entity Balance Post Set‐Off (1)

As of 12/31/2017, Unaudited

Loans (2)(3)

Adjuntas $13,480,627

Aguada 1,717,479

Aguadilla 56,596,876

Aguas Buenas 3,979,597

Aibonito 4,626,704

Anasco 4,427,028

Arecibo 30,031,413

Arroyo 6,227,056

Barceloneta 30,717,150

Barranquitas 1,775,761

Bayamon 34,971,733

Cabo Rojo 20,526,442

Caguas 36,696,738

Camuy 6,776,207

Canovanas 13,299,631

Catano 2,427,940

Cayey 20,014,776

Ceiba 2,161,740

Ciales 6,140,752

Cidra 10,472,263

Coamo 12,626,790

Comerio 3,137,009

Corozal 6,254,090

Culebra 496,182

Dorado 35,551,253

Florida 2,998,098

Guanica 6,599,188

Guayama 11,887,715

Guayanilla 9,452,501

Guaynabo 98,324,452

Gurabo 18,891,524

Hormigueros 1,433,452

Isabela 5,394,600

Jayuya 7,875,498

Juana Díaz 11,044,960

Juncos 33,365,112

Lajas 7,235,992

Las Marias 4,768,345

Las Piedras 14,837,053

Loiza 5,649,773

Luquillo 5,364,011

Manati 37,293,323

Maricao 6,369,621

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Schedule 3

Issuer Collateral ‐ Municipal Loans

Entity Balance Post Set‐Off (1)

As of 12/31/2017, Unaudited

Loans (continued) (2)(3)

Maunabo $11,583,346

Mayaguez 12,124,932

Moca 8,299,227

Morovis 11,576,734

Naguabo 3,037,295

Naranjito 10,436,846

Orocovis 2,857,095

Patillas 8,558,106

Penuelas 12,715,328

Ponce 75,338,411

Quebradillas 5,538,012

Rio Grande 19,246,599

Sabana Grande 3,543,663

Salinas 11,559,736

San German 14,296,574

San Juan 243,182,332

San Lorenzo 13,674,914

San Sebastian 16,659,884

Santa Isabel 17,876,413

Toa Alta 13,365,888

Toa Baja 69,122,323

Trujillo Alto 27,781,421

Utuado 2,201,078

Vega Alta 5,255,342

Vega Baja 20,675,826

Vieques 7,748,261

Villalba 7,199,031

Yabucoa 13,036,371

Yauco                         27,151,701

Total $1,349,561,140

Notes

(1)  Pursuant to Article 501 of the GDB Restructuring Act, loan balances of municipalities are net of undisbursed 

municipal loan proceeds for the corresponding loans.

(2)  Balances are as of 12/31/2017 as adjusted to reflect the application of all municipal deposits, against corresponding 

loans. Municipal deposits applied against municipal loans, after corresponding escrow deposits to corresponding

loans, relative to the type of deposit. (CAE Deposits against CAE Loans, IVU Deposits against IVU Loans, with all

undesignated deposits applied to outstanding principal balances in order of Operational, Revenue, IVU, then CAE).

Deposit balances are applied against the corresponding loan types in ascending order of outstanding balances on

June 30, 2018, which date is subject to change.

(3)  Arecibo, Cayey, Guaynabo, Manati, and Mayaguez balances reflect $13.1 million adjustment for loans that are

collateral for the AEELA deposit.

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Schedule 4

Issuer Collateral ‐ Other Assets

Entity Balance Post Set‐Off (1)

As of 12/31/2017, Unaudited

Loans or Other Obligations due from Public Corporations and Public Agencies

PR Highways and Transportation Authority (HTA) (2) $1,925,186,798

PR Ports Authority (PRPA) 266,645,165

Port of the Americas (3) 227,233,700

Government of Puerto Rico ‐ General Obligation 169,438,038

PR Convention Center District Authority (PRCCDA) 142,869,963

PR Public Buildings Authority (PBA) 140,883,605

PR Aqueduct and Sewer Authority (PRASA) 53,360,638

PR Industrial Development Company (PRIDCO) 53,326,121

PR Solid Waste Management Authority (SWMA) 44,176,601

Municipal Advances 43,436,782

Port Authority of Ponce 20,762,669

PR Housing Finance Authority (Restructured Repurchase Agreement) 19,330,527

Comprehensive Fund for Agricultural Development of PR (FIDA) 15,468,627

Act 71 of 2010 ‐ Interagency Committee                               995,449

Private loans 803,470

Total $3,123,918,153

Note

(1)  Pursuant to Article 302 of the GDB Restructuring Act, the balance of liabilities owed between GDB and the 

Commonwealth of Puerto Rico or any agency, department, office, public corporation, trust, fund, system, 

instrumentality, political subdivision, taxing authority of the Commonwealth other than a municipality of the 

Commonwealth (each a “Non‐Municipal Government Entity”) has been determined by applying the outstanding 

balance of any deposit of a Non‐Municipal Government Entity against the outstanding balance of any loan of such 

Non‐Municipal Government Entity owed to GDB or of any bond or note of such Non‐Municipal Government Entity 

held by GDB as of such date (other than any loan, bond or note of a Non‐Municipal Government Entity secured by a 

mortgage over real property).

(2)  Balance includes approximately $1.7 billion in lines of credit owed to GDB and $200 million in 1998 Series A Variable

Rate Revenue Bonds held by GDB.

(3)  Balance includes $225.5 million in bonds guaranteed by the Government of Puerto Rico and $1.7 million in an

appropriation line of credit.

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Schedule 4

Issuer Collateral ‐ Other Assets

Property

Real Estate Owned Assets

North PR‐177/South of El Polvorín Community and Jardines de Caparra Urban Train Station, Bayamón 

Muñoz Rivera Ave., corner of Coll & Toste St. and Jesús T. Piñero Ave., San Juan

Southwest of Sagrado Corazón Urban Train Station, Martín Peña Sector, San Juan

Corner of Muñoz Rivera Ave., Esteves St. and Ponce de León Ave., San Juan

South of PR‐199, East and South of Intersection Road PR‐845, Trujillo Alto

Intersection of Road PR‐10 and Emilio Fagot Ave., Ponce

Road 3, Km. 48, Fajardo; Parcel 1

Road 3, Km. 48, Fajardo; Parcel 2

Ruiz Soler Complex, North and Intersection of Km 8.2, Road PR‐2, Bayamón

Rivera‐Martínez Ave., Across from Puerto Rico Coliseum, Adjacent to Acuaexpreso Terminal, San Juan

West of Km 86.0, PR‐10,  Arecibo

Northwest corner of Intersection of Las Cumbres and San Ignacio Ave., Guaynabo

North of Km 4, Road PR‐906, Guayanés Ward, Yabucoa

PR‐846 and West Marginal PR‐181, Trujillo Alto

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Schedule 5

Issuer Collateral ‐ Loan Proceeds Assigned to Issuer

Entity Balance Post Set‐Off (1)

As of 12/31/2017, Unaudited

Loan Proceeds Assigned to Issuer

PR Administration of Medical Services $282,447,692

Special Communities Perpetual Trust (SCPT) 242,593,727

PR Health Insurance Administration (ASES) 182,196,327

PR Comprehensive Cancer Center 120,482,398

Center for Municipal Revenue Collection (CRIM) 105,904,465

PR Tourism Development Fund (TDF) 46,880,124

Economic Development Bank 42,305,218

Cantera Peninsula Integral Development Company 37,791,088

PR Infrastructure Financing Authority (PRIFA) (World Plaza Building) 37,361,150

Municipal Revenues Collection Center (CRIM) 26,860,126

University Medical Services 10,030,096

Puerto Rico Public Private Partnership Authority 6,159,248

Puerto Rico Conservatory of Music Corporation 189

Total $1,141,011,848

Note

(1) Pursuant to Article 302 of the GDB Restructuring Act, the balance of liabilities owed between GDB and the

Commonwealth of Puerto Rico or any agency, department, office, public corporation, trust, fund, system,

instrumentality, political subdivision, taxing authority of the Commonwealth other than a municipality of the

Commonwealth (each a “Non‐Municipal Government Entity”) has been determined by applying the outstanding

balance of any deposit of a Non‐Municipal Government Entity against the outstanding balance of any loan of such

Non‐Municipal Government Entity owed to GDB or of any bond or note of such Non‐Municipal Government Entity

held by GDB as of such date (other than any loan, bond or note of a Non‐Municipal Government Entity secured by a

mortgage over real property).

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Exhibit U to Declaration Page 35 of 43
Schedule 6

Public Entity Trust Claims

Entity Balance Post Set‐Off (1)

As of 12/31/2017, Unaudited

Public Entity Deposits

PR Electric Power Authority (PREPA) $114,108,631

PR Housing Finance Authority (PRHFA) 62,722,832

Puerto Rico State Insurance Fund (SIF) 43,266,388

Land Administration 39,029,569

PR Tourism Company (PRTC) 34,866,663

Government Employees Retirement System 32,948,612

PR Infrastructure Financing Authority (PRIFA) 31,307,999

PR Sales Tax Financing Corporation (COFINA) 26,096,175

PR Public Finance Corporation (PFC) 28,443,959

The Children's Trust Fund (CTF) 16,666,456

University of Puerto Rico (UPR) 16,542,930

PR Land Authority 11,456,426

PR Development Fund 9,673,622

PR Integrated Transit Authority 9,496,979

PR Industrial, Tourist, Educational, Medical and Environmental Control 

Facilities Financing Authority (AFICA) 9,494,982

PR Energy Commission 6,000,319

Municipal Finance Agency (MFA) 4,913,899

Agricultural Insurance Corporation 2,812,262

Puerto Rico Trade and Export Company  2,818,297

PR Maritime Shipping Authority 1,231,009

Corporation for the Development of Exports 898,150

Roosevelt Roads Local Development Authority 671,440

Telephones of Puerto Rico 634,117

Model Forrest Office of Puerto Rico 331,297

Metropolitan Bus Authority (MBA) 216,400

Consortium of the Northwest 17,951

Jose M. Berrocal Institute 128,020

Sugar Corporation of Puerto Rico 92,716

Public Corporation for the Supervision and Insurance of PR Cooperatives 

(COSSEC) 66,233

Corporation for the Musical Arts 59,468

Consortium of the Southeast 20,041

Hotel Development Corporation 15,269

Consortium of North Manati 8,517

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Exhibit U to Declaration Page 36 of 43
Schedule 6

Public Entity Trust Claims

Entity Balance Post Set‐Off (1)

As of 12/31/2017, Unaudited

Public Entity Deposits (continued)

Maritime Transport Authority $4,897

PR Art Museum 1,341

Consortium of the Southwest 840

Yo Si Puedo Inc. 336

Consortium of the South Central ‐ ASIFAL 106

School of Plastic Arts 2

Total $507,065,148

Notes

(1) Pursuant to Article 302 of the GDB Restructuring Act, the balance of liabilities owed between GDB and the

Commonwealth of Puerto Rico or any agency, department, office, public corporation, trust, fund, system,

instrumentality, political subdivision, taxing authority of the Commonwealth other than a municipality of the

Commonwealth (each a “Non‐Municipal Government Entity”) has been determined by applying the outstanding

balance of any deposit of a Non‐Municipal Government Entity against the outstanding balance of any loan of such

Non‐Municipal Government Entity owed to GDB or of any bond or note of such Non‐Municipal Government Entity

held by GDB as of such date (other than any loan, bond or note of a Non‐Municipal Government Entity secured by a

mortgage over real property).

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Schedule 7

Public Entity Trust Collateral

Entity Balance Post Set‐Off (1)

As of 12/31/2017, Unaudited

Cash 

Total TBD

Collateral ‐ Public Entity Loans / Obligations 

Government of Puerto Rico (including Public Agencies) $905,491,922

Total $905,491,922

Notes

(1) Pursuant to Article 302 of the GDB Restructuring Act, the balance of liabilities owed between GDB and the

Commonwealth of Puerto Rico or any agency, department, office, public corporation, trust, fund, system,

instrumentality, political subdivision, taxing authority of the Commonwealth other than a municipality of the

Commonwealth (each a “Non‐Municipal Government Entity”) has been determined by applying the outstanding

balance of any deposit of a Non‐Municipal Government Entity against the outstanding balance of any loan of such

Non‐Municipal Government Entity owed to GDB or of any bond or note of such Non‐Municipal Government Entity

held by GDB as of such date (other than any loan, bond or note of a Non‐Municipal Government Entity secured by a

mortgage over real property).

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Schedule 8

Municipal Loan Portfolio Forecast

Forecasted Proceeds Balance Post Set‐Off ($)

Date New Interest Amortization Total

7/1/2018 $45,391,552 $65,059,601 $110,451,153

1/1/2019 31,427,844                        ‐                                                                31,427,844

7/1/2019 31,427,844                                             66,561,513                           97,989,358

1/1/2020 32,640,313                        ‐                                                                32,640,313

7/1/2020 32,640,313                                             69,292,726                         101,933,039

1/1/2021 33,461,029                        ‐                                                                33,461,029

7/1/2021 33,461,029                                             72,928,154                         106,389,183

1/1/2022 33,881,547                        ‐                                                                33,881,547

7/1/2022 33,881,547                                             74,015,569                         107,897,116

1/1/2023 33,925,599                        ‐                                                                33,925,599

7/1/2023 33,925,599                                             77,542,597                         111,468,196

1/1/2024 33,484,513                        ‐                                                                33,484,513

7/1/2024 33,484,513                                             81,812,819                         115,297,333

1/1/2025 32,493,214                        ‐                                                                32,493,214

7/1/2025 32,493,214                                             83,392,923                         115,886,138

1/1/2026 31,046,309                        ‐                                                                31,046,309

7/1/2026 31,046,309                                             82,432,166                         113,478,475

1/1/2027 27,686,084                        ‐                                                                27,686,084

7/1/2027 27,686,084                                             82,222,845                         109,908,929

1/1/2028                       24,313,805                                     ‐                           24,313,805

7/1/2028                       24,313,805                      81,683,617                         105,997,422

1/1/2029                       20,936,730                                     ‐                           20,936,730

7/1/2029                       20,936,730                      79,119,505                         100,056,235

1/1/2030                       17,630,249                                     ‐                           17,630,249

7/1/2030                       17,630,249                      77,811,975                           95,442,224

1/1/2031                       14,380,036                                     ‐                           14,380,036

7/1/2031                       14,380,036                      76,804,289                           91,184,326

1/1/2032                       11,156,322                                     ‐                           11,156,322

7/1/2032                       11,156,322                      66,268,457                           77,424,779

1/1/2033                          8,233,116                                     ‐                             8,233,116

7/1/2033                          8,233,116                      52,787,706                           61,020,822

1/1/2034                          5,789,811                                     ‐                             5,789,811

7/1/2034                          5,789,811                      44,508,578                           50,298,390

1/1/2035                          3,688,337                                     ‐                             3,688,337

7/1/2035                          3,688,337                      32,491,264                           36,179,601

1/1/2036                          2,157,467                                     ‐                             2,157,467

7/1/2036                          2,157,467                      22,812,441                           24,969,908

1/1/2037                          1,078,875                                     ‐                             1,078,875

7/1/2037                          1,078,875                      12,813,452                           13,892,327

1/1/2038                             471,486                                     ‐                                 471,486

7/1/2038                             471,486                        9,523,174                             9,994,660

1/1/2039                               20,510                                     ‐                                   20,510

7/1/2039                               20,510                            372,411                                 392,921

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Schedule 8

Municipal Loan Portfolio Forecast

Forecasted Proceeds Balance Post Set‐Off ($)

Date New Interest Amortization Total

1/1/2040 4,258 ‐ 4,258

7/1/2040 4,258 121,661 125,919

Notes

(1) Forecast is as of 12/31/2017 as adjusted to reflect the application of all municipal deposits against corresponding

loans (for municipalities with more deposits than loans at GDB, excess deposits remain as Title VI Bond Claim in

Schedule 1). Municipal deposits are applied against municipal loans, after corresponding escrow deposits to

corresponding loans, relative to the type of corresponding deposit. (CAE Deposits against CAE Loans, IVU

balances are applied against the corresponding loan types in ascending order of outstanding balances. Deposits

against IVU Loans, with all undesignated deposits applied to outstanding principal balances in order of

Operational, Revenue, IVU, then CAE). Deposit balances are applied against the corresponding loan type in

ascending order of outstanding balances. Balances are adjusted for the July 1, 2018 payment assuming the

application of deposits against corresponding municipal loans on June 30, 2018, which date is subject to change.

(2) Applied interest rates are based off a forward curve reaching an assumed interest rate ceiling in 2026 of 9.5%.

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Schedule 9

Federal Funds

Entity Balance

As of 12/31/2017, Unaudited

Municipal Federal Funds(1)

Barranquitas $919,410

Carolina 799,060

Aibonito 635,797

San Juan 256,384

Guaynabo 249,728

Maricao 235,274

Luquillo 202,319

Loiza 197,877

Santa Isabel 186,607

Morovis 185,421

Ciales 180,465

Coamo 170,359

Aguada 168,714

Anasco 150,327

Guanica 113,376

Las Piedras 113,026

Fajardo 112,199

Adjuntas 112,096

Culebra 110,157

Humacao 97,539

Aguas Buenas 96,961

Las Marias 76,523

Salinas 74,352

Trujillo Alto 69,920

Ceiba 56,205

Hormigueros 54,908

Juncos 53,730

Corozal 50,918

Camuy 47,155

Rio Grande 46,102

Toa Alta 41,135

San German 37,646

Isabela 26,017

Utuado 19,340

Ponce 15,261

Guayama 15,019

Arecibo 9,654

Lares 7,841

Naranjito 6,443

Villalba 3,897

Patillas 3,494

Gurabo 3,492

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Schedule 9

Federal Funds

Entity Balance

As of 12/31/2017, Unaudited

Municipal Federal Funds (continued)(1)

Catano $2,289

Comerio 1,648

Guayanilla 1,430

Arroyo 496

Lajas 131

Aguadilla 34

Toa Baja 4

Total $6,018,179

Notes

(1) In April, 2017, GDB communicated to all depositors requesting confirmation of balances of federal funds held at

GDB, including identification of the sources of such funds. The balances presented are the result of such

efforts and subsequent communications during calendar year 2017.

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