Puerto Rico seeks proposals for legal, financial advisers

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By Nick Brown

Governor Ricky Rossello, who was sworn in on Monday, had
sharply criticized the financial policies of his predecessor,
Alejandro Garcia Padilla, during the 2016 campaign.

Those policies were shaped in large part by law firm Cleary
Gottlieb Steen & Hamilton and financial adviser Millstein and
Co. Both firms have represented the island since 2014, as it
descended into economic crisis.

The announcement from the Fiscal Agency and Financial
Advisory Authority, the island’s primary fiscal agent, could
bring the firms’ tenures to an end.

Garcia Padilla pushed for sharp reductions in debt payments
to Puerto Rico’s creditors and ordered several defaults during
his term. Rossello, who favors U.S. statehood for the island,
believes it should try to limit such cuts while imposing
belt-tightening measures like consolidating public agencies.

Firms have until Friday to submit their qualifications.
Those that have represented Puerto Rico’s creditors are not
barred from vying for a contract.

According to Puerto Rico’s comptroller’s office, Cleary and
Millstein are under contract through this fiscal year, which
ends on June 30, although Rossello can review those agreements.
Cleary was to be paid $11 million, and Millstein was to get $9
million under the deals.

Puerto Rico owes $18 billion in general obligation debt,
backed only by a constitutional promise; $15 billion in
so-called COFINA debt backed by sales tax proceeds; and billions
more in debt at public agencies like power authority PREPA and
water utility PRASA.

Nearly half the island’s 3.5 million residents live in
poverty. Its unemployment rate is more than twice the U.S.
average, and its population continues to fall as locals flock to
the U.S. mainland.

Creditors are barred from suing Puerto Rico over missed debt
payments at least through Feb. 15 under a federal rescue law
known as PROMESA. The law, passed last year, calls for the
island to try to reach consensual compromises with creditors in
the meantime.

Facilitating those talks will fall to a federal oversight
board that has hired its own advisers. It is unclear how much
clout Puerto Rico’s government advisers would have in those

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