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New York • Puerto Rico officials are scheduling meetings with creditors as soon as Wednesday to begin talks on restructuring its $70 billion of debt, according to two people with knowledge of the matter.
The U.S. territory expects to host at least two meetings in the New York offices of its law firm Cleary Gottlieb Steen & Hamilton over the next two weeks to present the proposal to restructuring advisers representing its creditors, said the people, who asked not be identified because the information isn't public.
Representatives of at least five investor groups have been coordinating with Puerto Rico's consultants to organize the meetings, the people said.
The creditors themselves, who own securities such as general-obligation bonds and Government Development Bank notes, will have to sign non-disclosure agreements before they can see the proposal, the people said. Lenders typically wait until their restructuring consultant advises them to sign a confidentiality pact before entering debt talks.
Barbara Morgan, a spokeswoman for the development bank at SKDKnickerbocker in New York, declined to comment.
Puerto Rico is under pressure to persuade lenders to agree to a restructuring accord before July 1, when it must make a $2 billion payment.
A commonwealth agency failed to pay $35.9 million it owed Jan. 4 after the administration used revenues pledged to certain types of bonds to meet other obligations.
That prompted bond insurers Ambac Financial Group Inc. and Assured Guaranty Ltd. to file a lawsuit seeking to prevent the island from diverting revenue in what's known as a clawback.
Talks between Puerto Rico and one of its major creditor groups broke down in October after the two sides failed to agree on how to restructure the commonwealth's debt and inject new capital.
The island's government released a restructuring proposal in September.
Puerto Rico has been fighting to gain Congressional approval for a change in the law that would enable some of its agencies to file for bankruptcy protection, a process that would allow it to force losses on creditors.
It reached an agreement last month with creditors of the island's main electricity provider, the Puerto Rico Electric Power Authority.
Under the terms of the deal, which requires legislative approval, creditors would accept a 15 percent loss on their bonds through a debt exchange.