García Padilla declares emergency at HTA and halts toll transfers to bondholders

On May 18, 2016, Primera Hora reported that Governor Alejandro García Padilla signed Executive Order 2016-018, declaring a state of emergency for the Highway and Transportation Authority (HTA/ACT) under the Emergency Moratorium and Financial Rehabilitation Act (Act 21 of 2016).

According to the release, obligations to remit certain funds tied to financial obligations are suspended and extraordinary measures are authorized to maintain essential services. The order suspends HTA’s duty to transfer to its bondholders toll revenues and any other income received, and imposes a stay of judicial and other claims.

The administration said it seeks to let HTA continue construction projects and pay contractors and works in progress. It clarified that the order does not establish a moratorium on payment of any obligation: funds for toll bonds were advanced in trustee accounts through the following year. It also does not affect EO-2015-046 on retained funds (clawback).

As of December 31, 2012, HTA’s debt to the Government Development Bank (GDB) exceeded $2,200 million without a repayment source, according to the governor. An emergency declaration and suspension of transfers do not equal theft or an adjudicated debt haircut.