On behalf of power producer AES Puerto Rico (AES-PR), Sidley recently closed a series of comprehensive restructuring transactions which de-levered AES-PR’s capital structure, substantially raised its future revenues with the Commonwealth of Puerto Rico, and ensured the continued supply of up to 25% of the island’s power for the safety of Puerto Rico’s millions of residents. AES-PR faced increased challenges due to local developments, including legislation which now requires the costly long-haul barging of residuals to overseas landfills. While forestalling debt service to its municipal bondholders, Sidley assisted AES-PR in the restructuring of its capital structure by converting tranches of municipal bond debt to passive preferred equity in a Dutch parent and by securing a significant liquidity infusion from its ad hoc group debtholders and subordinating other debt holdings by way of heavily negotiated restructuring support agreements and ancillary deal terms. As a result, AES-PR maintained full ownership of the enterprise with a deleveraged capital structure.
Through negotiations and hearings that involved multiple regulatory agencies (including PREPA, AFICA, PREB, and the Financial Oversight & Management Board for Puerto Rico), Sidley worked closely with its client to obtain approvals of long-term contracts with modernized economics and related governmental approvals. With associated transactions in the Cayman Islands and the Netherlands, and with the ultimate support of Governor Pedro Pierluisi, AES-PR closed all transactions with 99% support from its bondholders — thereby avoiding court bankruptcy filings and ensuring baseload ongoing power to those on the island — while AES’ renewables projects continue to progress around the world.
The Sidley team was led by Duston McFaul and Maegan Quejada, and involved over 50 Sidley lawyers and legal professionals in Houston, Washington, D.C., Dallas, and London, included daily support from Veronica Courtney and assistance from Jeri Leigh Miller, Chelsea McManus, Raveena Channa, Ashrita Gulati, and Alex Thompson (all Restructuring), as well as Sam Boxerman (Environmental), Zack Pullin and Andrew Smith (Tax), Brian Minyard and Matt Walker (Energy Finance), George Vlahakos and John Stribling (Energy/Capital Markets), Sarah Tucker (Energy), and Rob Velevis (Litigation).
