Wednesday, November 26, 2014

Puerto Rico: FBI Agents Raid PRASA for 2 Hours, Seize Records, Electronic Data

According to Reuters, the US Federal Bureau of Investigation launched a surprise raid at Puerto Rico's Aqueduct and Sewer Authority (PRASA) on Tuesday (November 25) in a probe the head of the commonwealth agency said was focused on a single case and not the entire agency.

"They came for some very specific information that we openly provided regarding one case," Executive President Alberto Lazaro said in a telephone interview.

"They took two piles of documents from the legal department and some electronic data from the IT department. They interviewed some employees from the purchasing and finance departments and from the legal division," he said.

Lazaro said the raid "came out of the blue" and declined to provide case details because the investigation was ongoing.

Six FBI agents arrived at PRASA at 0900 hours and remained for roughly two hours and left carrying piles of documents and computer equipment, local news website El Vocero reported.

Any suspicion of financial wrongdoing at the indebted agency could compromise PRASA as it attempts to raise vital financing to support it operations next year.

COMMENT: Lazaro said PRASA is working closely with the Government Development Bank (GDB) on issuing a bond of at least $770 million in the first half of 2015.

The proceeds would be used to pay off credit lines maturing in March and raise about $500 million to fund a capital works program for the next two years. PRASA will pay off $200 million to local banks Banco Popular and Oriental Bank due in March, as well as $70 million to the GDB.

News of the raid did not affect PRASA's bonds. The average price of bonds maturing in 2042 with a coupon of 5.25% rose to 67.80 cents on the dollar on Tuesday compared to 67.241 on Monday. 

Puerto Rico is struggling with debts of over $70 billion and is undertaking a restructuring at electric power authority PREPA. PRASA has around $3.7 billion in debt and could also face a debt restructuring under a law passed earlier this year.

PRASA operates the public water and waste systems on the island of 3.6 million people. The agency had net revenues after operating expenses of $384.4 million in fiscal 2014, according to preliminary results.

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