Editorial: ‘Same old trick’ in debt restructuring at Puerto Rico Electric Power Authority FacebookTwitterLinkedInEmailPrint分享Caribbean Business News:The most recent announcement of a preliminary deal between Prepa and its bondholders includes a transition charge to help pay for a bond exchange with creditor constituencies that do not include the monoline bond insurance companies and the fuel-line lenders. This is akin to stalled hyper-mitosis in cell division prior to birth—a Prepa deal takes at least two-thirds of the creditor groups brought into the fold to bind the holdouts in a consensual deal. Much work remains to be done.Early in Puerto Rico’s debt game, the complex makeup of that bankrupt utility’s creditor constituencies—somewhat emblematic of Puerto Rico’s debt—made it an important target in the restructuring jamboree inside the Puerto Rico Oversight, Management & Economic Stability Act (Promesa).Thus, Promesa’s circus master, U.S. House Natural Resources Committee Chairman Rob Bishop (R-Utah) tasked staff director Bill Cooper to codify the deal into law when he was enacting Promesa in 2016. But the rate case then, as now in this latest iteration, is likely to sting.Try as they might to privatize Prepa, members of U.S. Congress who have invested considerable political capital—some with midterms upon them, no less—would like to see a securitization mechanism that will not blow Puerto Rico’s rates sky high. After all, the discourse employed by the energy brigades on Capitol Hill—that Puerto Rico needs affordable and reliable power to chart a path to growth—rings a bit hollow if the people have to foot the bill for a 20 percent hike in their electric bills five years afield.The inevitability of a rate hike first reared its ugly head when Prepa’s Chief Restructuring Officer Lisa Donahue took a crack at restructuring the power company’s massive $9 billion debt load under the administration of then-Gov. Alejandro García Padilla. Donahue managed to work out 17 forbearance agreements with creditors that showed a propensity to push debt-payment deadlines down the road as they tried mightily to strike a bond exchange. Then, as now, somebody was going to pay dearly—the answer always came back to shared pain by the people.Today, the declining population continues to present high-wire dangers in the restructuring of Prepa’s debt. There seems to be no way around the transition charge as the deal is currently structured. The transition charge, which is a fee that will be used to pay for debt service, will be 2.35 cents per kWh for years one to five; 2.7 cents for years six to 10; and 2.8 cents for year number 11. However, starting in year 12, there will be annual 2.5 percent increases over the prior year’s transition charge. Shared pain by the people, indeed.In fact, the language in a draft bill to privatize Prepa, authored by Rep. Don Young (R-Alaska) and circulated on the Hill several weeks ago, implies significant challenges in the privatization of the utility tied specifically to a shaky profit and loss forecast absent rate hikes. That self-evident truth prompted the inclusion of language enabling a $3 billion backstop structure financed by U.S. Treasury to fill any funding gaps by investors who purchase Prepa generation assets.This newspaper made a quick visit to Capitol Hill two weeks ago to see firsthand which way the currents of change were blowing. Frustration was a very common emotion etched on faces of those dealing with Prepa. As one House Natural Resources aide put it: “We could have had this done two years ago and avoided all this mess.” Yes; but at what cost and paid for by whom? If the answer is by “we the people,” then the Prepa overhaul for the people, by the people is a sham. And economic development will be a decades’ old memory, a story told in history books, but not seen in our lifetime.More: Same Old Tricks in Prepa Circus
Audit experts have warned that changes to pensions accounting rules could blur the lines between how defined contribution (DC) and defined benefit (DB) schemes are reported in company accounts.The International Financial Reporting Standards (IFRS) Interpretations Committee voted last week to finalise a provisional decision made in March regarding classification requirements of International Accounting Standard 19, Employee Benefits (IAS 19).Twelve of the committee’s 15 members supported the decision, but a number voiced concerns about the risk of scheme sponsors attempting to engineer specific accounting outcomes.In particular, they were concerned that the committee’s actions could blur the dividing line between DB and DC pension promises under IAS 19. Andrew Buchanan“What I think IAS 19 tells you to do is to look at what the sponsor’s economic exposure is, and then classify the plan according to that.”In March, the IFRS committee provisionally ruled that a sponsor’s right to receive a discount following an earlier overpayment of contributions to a DC pension scheme did not flip the plan into DB accounting.Under IAS 19, a DC plan is a pension plan into which a sponsor pays a fixed amount of contributions with no further obligations. Equally, any plan that is not a DC arrangement is automatically treated as a DB plan.DC accounting under IAS 19 requires sponsors to do nothing more than expense the current period’s contributions. For a DB scheme, however, a sponsor must recognise a balance sheet asset or liability, depending on the funding position of the scheme.The committee’s chair Sue Lloyd noted that a ‘fixed’ plan contribution “doesn’t literally mean ‘fixed’ because we know that there are some types of variability that [are] countenanced in the standard”.FRC maps out path to public body statusThe UK’s audit watchdog, the Financial Reporting Council (FRC), has released its 2019-20 plan and budget, detailing a road map for transitioning into a public body.In March last year, business minister Greg Clark ordered a wide-ranging inquiry into the FRC’s affairs, which published its final report in December. It recommended transferring the FRC’s functions to a new regulator that would be properly accountable to parliament.The FRC is now in the process of transitioning into that new body, known as the Audit, Reporting and Governance Authority.In August 2017, IPE revealed that the FRC had abandoned a 13-year battle to avoid being classified as a UK government body.The FRC maintained over that period that it was a private sector entity. However, documents obtained by IPE revealed that the FRC had only ever been a public body – despite having failed to fulfil its obligations as such, including complying with the UK’s Freedom of Information Act and imposing government caps on pay. Stephen Haddrill, CEO, FRCFRC chief executive Stephen Haddrill said: “Ahead of full implementation of the proposals, the FRC will do all in its power to promote transparency and integrity in business, and improve audit quality, corporate governance and investor stewardship.”According to the FRC’s plan, it was in the process of voluntarily applying Freedom of Information provisions to all its work prior to formal designation as a public authority. It had also updated its procedures for handling conflicts of interest and procurement.Multi-employer rule changeSeparately, the FRC has published a series of amendments dealing with how companies should report the impact of a shift from DC accounting to DB accounting by a multi-employer plan.Under the change, sponsors must present the impact of the change in other comprehensive income.The amendments to FRS 102 mean that plan sponsors must recognise the difference between the net DB obligation and the liability arising from an agreement to fund the scheme deficit in other comprehensive income.The FRC said scheme sponsors should apply the new rules as soon as they have all of the necessary information. The changes take effect from 1 January 2020. Committee member Andrew Buchanan, global head of IFRS at accountancy firm BDO, said: “I worry with this that there would be some real structuring opportunities to get the kind of plan classification that you want.
The English Premier Leagueâ€™s Player of the Season for 2016/17 was at his ball-winning best against Australia, regaining possession 14 times in all, though he was quick to play down that statistic.â€œWhat matters to me is winning. It was vital for us to come away with three points,â€ he said, before heaping praise on one of his team-mates: â€œSometimes there are vital defensive situations that can change the outcome of a match. And on Saturday, without Hugo Lloris, weâ€™d have gone 1-0 down in the 20th minute. We were all grateful to him.â€Speaking in a low voice and almost apologetic tone, the Chelsea player continued to deflect attention away from himself: â€œIâ€™m just a defensive player. Itâ€™s the lowest position. Iâ€™ve got the ball-carriers in front of me, and itâ€™s our job as midfielders to link up with the defence and pick out the forwards so we can create chances.â€ Described by Frank Lampard as the best midfielder in the world, Kante is reluctant to say any more about his art.Up next for France is Peru this afternoon in Ekateringurg, a side he has been keeping an eye on: â€œThey play with a lot of intensity and commitment and give it all theyâ€™ve got.â€ That match will give Kante another opportunity to win possession time and again, and all without a word out of place or any visible signs of irritation.Calmly rising to his feet, he shook hands once more and left through the door he came in, having left us none the wiser as to who he really is. Modest Kante is a man who keeps himself to himself and his secrets firmly under wraps.Share this:FacebookRedditTwitterPrintPinterestEmailWhatsAppSkypeLinkedInTumblrPocketTelegram Ngolo Kante won his first cap for France against Russia on 29 March 2016. Two years and 25 caps later, he is making his FIFA World Cup debut as an indispensable part of Les Bleus line-up. And he has achieved that status by doing what he has always done, wherever he has played: by winning and recovering possession, all without saying a word.Kante came in through the door, shook hands, and took a seat, a typically discreet smile on his face. Describing his first taste of the World Cup, the 27-year-old midfielder told FIFA: â€œArriving in Russia was special. Itâ€™s taken a lot of work and effort to get here and I feel very proud.â€When it comes to work, Kante, who hails from Parisâ€™ tenth arrondissement, is not afraid to roll up his sleeves and get stuck in, especially when it comes to dispatching his midfield duties. An example of that came in the 2014/15 season. Still at Caen at the time, he racked up an average of 5.3 tackles per match during the French league campaign, more than any other player in Europeâ€™s five major championships. If ball-winning were an art form, Kante would be a museum piece.