General Obligation Bondholders

of the Commonwealth of Puerto Rico

TERMS OF
CREDITOR-LED GO RESTRUCTURING PROPOSAL
April 5, 2016

Subject to FRE 408 and all

local law equivalents

Executive Summary

GO Bondholders Assist the Commonwealth - The attached Term Sheet represents an agreement amongst investment
managers holding nearly $5 Bn of GO bonds, issued by the Commonwealth of Puerto Rico, to defer principal repayment in
order to give the Commonwealth sufficient time to deal with its current liquidity crisis.

Principal Deferment - Through a consensual exchange offer, GO bondholders agree to defer principal repayments for 5
years.

Substantial Savings - This exchange would save the Commonwealth $1.9 Bn in debt service payments over the next 5
years.

New Loan - The transaction also offers [$750 MM] of liquidity upfront through a GO issuance at a reasonable interest rate.

Avoid GO Default - The combination of principal deferment plus [$750 MM] in new funds will help to avoid a July 1 default.

GO Preserved as Future Currency - The Commonwealth will need the GO debt as currency to finance itself in the future.
By avoiding a July 1 default, the Commonwealth will avoid damage to the GO debt that would otherwise impact the
Commonwealths ability to issue GO debt in the future.

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Subject to FRE 408 and all

local law equivalents

New GO and New Guaranteed Bonds

Creditors Receiving New GO and
New Guaranteed Bonds

GO and Guaranteed Bonds

Principal

Up to $17.0 Bn (100% of exchanged principal and accrued interest) (excludes

PRIFA BANs)
Maturities to be adjusted to smooth debt service and extend weighted average life
by 5 years

Interest

Contractual rates maintained

Monthly deposits of interest

Amortization Schedule

Interest only through June 2020

Level debt service beginning July 1, 2020 for 25 years

Participation Threshold

[]% of GO and Guaranteed Bonds

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Subject to FRE 408 and all

local law equivalents

New Money GO Bonds

Principal

[$750] MM subject to revision based on agreed-upon funding needs

Interest

[7%] per annum

Amortization Schedule

Interest only through June 2020

Principal scheduled thereafter to maximum amount available under GO debt limit

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Subject to FRE 408 and all

local law equivalents

TermsNew GO, New Guaranteed and New Money GO Bonds

Positive Covenants

Resumption of deposits into GO escrow account (to be held in a NY bank)

Monthly reporting

Negative Covenants

No new issuance of Guaranteed Bonds

No new issuance of additional GO Bonds unless compliant with Constitutional test
No additional sale, pledge or assignment of any tax; special revenue limitations
TBD

Statutory Lien

Further affirmation of first priority by enactment of statutory lien on General Fund

revenues (akin to Rhode Island and California)

Other Structural Provisions

New York law and venue

Maintain tax-exempt status
GO Guaranteed Bonds will continue to receive primary source of repayment (i.e.,
guarantee will not be triggered)
Cross-defaults among GO and Guaranteed Bonds

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