National Criticizes Puerto Rico Oversight Board For Its Improper and Unfortunate Decision to Authorize Title
III Bankruptcy Filing for PREPA
National Believes Oversight Board has Violated PROMESA and Caused Dire Consequences For Commonwealth
National Public Finance Guarantee Corporation (“National”), an indirect subsidiary of MBIA Inc. (NYSE:MBI), said today it
believes the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”) has violated the Puerto Rico
Oversight, Management, and Economic Stability Act (“PROMESA”) by authorizing a Title III bankruptcy filing by the Puerto Rico
Electric Power Authority (“PREPA”).
“We believe the Oversight Board’s decision to authorize a Title III filing for PREPA is ill-advised, improper, and could well
have dire consequences for Puerto Rico,” said Bill Fallon, CEO of National Public Finance Guarantee Corporation. “The Oversight
Board has violated PROMESA and is now pursuing an agenda that unnecessarily and inappropriately throws away PREPA’s carefully
constructed Restructuring Support Agreement. That Agreement was reached after three years of negotiations, has broad creditor
support and has been approved by all required parties, including two governors and the Puerto Rico legislature. Creditors, along
with PREPA, completed an immense amount of underlying work to understand the utility’s business and proposed significant
concessions that would lead to a successful solution for PREPA’s debt problems. A Title III bankruptcy filing could cause lengthy
litigation in which creditors would assert all of their rights to achieve payment in full and could result in rate increases that
would leave PREPA years away from attracting the private investment necessary to modernize. The RSA was the essential first step to
achieve viability for PREPA.”
As previously reported, National and other supporting creditors offered to take action that would have provided additional time
for discussions to avoid a Title III bankruptcy filing by PREPA, but those actions were rebuffed by Puerto Rico Governor Ricardo
Rosselló, PREPA and the Puerto Rico Fiscal Agency & Financial Advisory Authority.
Mr. Fallon continued, “The Oversight Board chairman asserted in today’s public hearing that this week, the Oversight Board
offered PREPA’s creditors, including insurers and banks, a similar economic deal as contained in the RSA, but with additional
provisions for Title III, but that is simply not true. The proposal had significantly different terms for the monolines, and we
believe it was designed to fail, given the timing of the proposal being made immediately before the payment date. We also strongly
take issue with the Oversight Board’s determination that the RSA is not a pre-existing agreement under PROMESA. This determination
fails to consider the statute and the facts in order to justify the Board’s clear failure to comply with its obligations under
PROMESA.”
Forward-Looking Statements
This release includes statements that are not historical or current facts and are “forward-looking statements” made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “anticipate,” “project,”
“plan,” “expect,” “estimate,” “intend,” “will likely result,” “looking forward” or “will continue,” and similar expressions
identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual
results to differ materially from historical earnings and those presently anticipated or projected, including, among other factors,
the possibility that MBIA Inc. or National will experience increased credit losses or impairments on public finance obligations
issued by state, local and territorial governments and finance authorities that are experiencing unprecedented fiscal stress; the
possibility that loss reserve estimates are not adequate to cover potential claims; MBIA Inc.’s or National’s ability to fully
implement their strategic plan; and changes in general economic and competitive conditions. These and other factors that could
affect financial performance or could cause actual results to differ materially from estimates contained in or underlying MBIA
Inc.’s or National’s forward-looking statements are discussed under the “Risk Factors” section in MBIA Inc.’s most recent Annual
Report on Form 10-K, which may be updated or amended in MBIA Inc.’s subsequent filings with the Securities and Exchange Commission.
MBIA Inc. and National caution readers not to place undue reliance on any such forward-looking statements, which speak only to
their respective dates. National and MBIA Inc. undertake no obligation to publicly correct or update any forward-looking statement
if it later becomes aware that such result is not likely to be achieved.
National Public Finance Guarantee Corporation, headquartered in Purchase, New York is the world’s largest U.S. public
finance-only financial guarantee insurance company, with offices in New York and San Francisco. Please visit National’s website
at www.nationalpfg.com.
National Public Finance Guarantee Corporation
Media:
Greg Diamond, 914-765-3190
or
Fixed-Income Investor Relations:
Kevin Brown, 914-765-3385
or
MBIA Inc.
Investor and Media Relations:
Greg Diamond, 914-765-3190
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