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HAMILTON, Bermuda–(BUSINESS WIRE)–On December 6, 2022, the Amended Fifth Amended Title III Plan of Adjustment of the Puerto Rico Highway and Transportation Authority (HTA Plan) became effective, marking the Puerto Rico Highway and Transportation Authority’s (HTA) exit from bankruptcy under Puerto Rico Oversight, Governance and Economic Stability Act (PROMESA). Under the HTA Plan, Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty Corp. (AGC), two bond insurance subsidiaries of Assured Guaranty Ltd. (NISE: AGO) (together with its subsidiaries, Assured Guaranty) resolved their exposure to HTA bonds that each was insured.
In connection with the HTA Plan, Assured Guaranty received approximately $104 million in cash and $807 million* in new Toll Bonds. In addition, in the third quarter of 2022, as part of the GO/PBA adjustment plan, Assured Guaranty received, in connection with the HTA Plan Support Agreement, $147 million in cash and $672 million in original notional amount of contingent value instruments.
Also, as part of HTA’s exit from bankruptcy, Assured Guaranty paid the holders of certain HTA bonds insured by AGM and AGC (Assured Insured HTA Bonds) and established trusts for holders of other insured insured HTA bonds. Specifically, Assured Guaranty paid 100% of the remaining principal amount, plus accrued interest, to the holders of certain insured insured HTA notes representing $711 million in net assured cash. Certain other insured secured HTA bonds, the holders of which made certain elections and which represented $451 million in insured net face value, were exchanged for new trust units (Trust Units) representing an interest in the aged insurance policy plus the toll bonds. No action is required by the Noteholders to receive such payments and/or Trust Units. Additional information regarding bondholders can be found in our company statement.
“HTA’s exit from bankruptcy is another important step forward for Puerto Rico,” said Dominic Frederico, president and CEO of Assured Guaranty. “It also eliminates a net amount of $711 million from Assured Guaranty’s insured exposure in Puerto Rico.” Together with certain other settlements in Puerto Rico that took effect last March, we have reduced our insured exposure in Puerto Rico in 2022 by more than $2 billion.
“While HTA’s bankruptcy has seen many changes over the past few years, the benefits of our insurance for insured HTA bondholders have remained constant.” As of the Effective Date, we have paid nearly $700 million in principal and interest to investors in our secured HTA Notes, while holders of unsecured HTA Notes have received nothing. Under the HTA plan that went into effect on December 6, investors in insured HTA bonds received either a cash payment (equal to 100% of their remaining principal plus accrued interest) or new trust units that continue to benefit from the associated insurance policies plus have an interest in the new toll bonds, while uninsured bondholders received compensation for the plan in a total amount significantly less than 100% of their outstanding principal.
“Puerto Rico’s only remaining non-performing guaranteed bond exposure is the Puerto Rico Electric Power Authority (PREPA). As with HTA and other entities in Puerto Rico, we prefer to resolve PREPA’s debt restructuring consensually and remain open to doing so. Additionally, PREPA bonds have strong creditor protections, and we will continue to defend our rights in court as necessary.”
* Represents the nominal value of bonds with current interest and the maturity value of capital increase bonds and capital increase convertible bonds.
Assured Guaranty Ltd. is a publicly traded Bermuda-based holding company (NISE: AGO). Through its affiliates, Assured Guaranty provides credit enhancement products to the US and international public finance, infrastructure and structured finance markets, and also provides asset management services. More information about Assured Guaranty Ltd. and its affiliates can be found at AssuredGuaranti.com.
All forward-looking statements made in this release reflect Assured Guaranty’s current views regarding future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may lead to actual results. significantly differ from those mentioned in these statements. These risks and uncertainties include, but are not limited to, those relating to the value and liquidity of new HTA bonds and contingent value instruments received in connection with the effectiveness of the HTA Plan; failure to reach a resolution of PREPA substantially in accordance with the terms of the Guarantee; future litigation and other risks and uncertainties not currently identified, management’s response to these factors and other risk factors identified in the surety bond’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of December 9, 2022. Guaranty Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether the result new information, future events or in any other way, unless it is prescribed by law.
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