Puerto Rico's Senior Creditors Agree to New Bankruptcy Exit Plan That Significantly Enhances Commonwealth's Financial Flexibility

Major holders of Puerto Rico's General Obligation ("GO") and Public Buildings Authority ("PBA") bonds ? including the Ad Hoc Group of Constitutional Debtholders, Ad Hoc Group of GO Bondholders, Lawful Constitutional Debt Coalition and QTCB Noteholder Group ? today reached an agreement with Puerto Rico's Financial Oversight and Management Board (the "Oversight Board") on a new Plan Support Agreement (the "New PSA") that will restructure approximately $18.8 billion of GO and GO-guaranteed liabilities. The New PSA builds on the February 2020 Plan Support Agreement by providing additional benefits and enhanced flexibility to the Commonwealth in light of the COVID-19 pandemic.

The creditor groups, which collectively hold approximately $8.2 billion in GO and PBA bond claims, commented:

"Since the onset of the COVID-19 pandemic, major creditors have engaged in good faith with the Oversight Board in order to provide Puerto Rico with the financial flexibility it needs to recover from this unprecedented public health crisis. The New PSA delivers that important flexibility by creating a reduced debt repayment schedule and introducing a number of meaningful creditor concessions. This widely-supported compromise will help Puerto Rico avert years of costly, distracting litigation and finally expedite the island's long-awaited exit from bankruptcy in 2021.

The New PSA reduces approximately $18.8 billion of GO and GO-guaranteed liabilities to approximately $7.4 billion, resulting in an extra $2.7 billion in principal debt reduction compared to the February 2020 agreement. The New PSA reduces debt service payments on GO and GO-guaranteed debt by $4.7 billion relative to the February 2020 agreement. The terms also cut the Commonwealth's maximum annual debt service to $1.15 billion, which is 22% lower than the cap included in the February 2020 agreement. Creditors have agreed to assume more risk and further align themselves with Puerto Rico's revitalization by taking a portion of their recovery in a contingent value instrument that only pays out if the Commonwealth's economy outperforms the May 2020 Certified Fiscal Plan.

We firmly believe the New PSA will help Puerto Rico continue to support its three million citizens during these difficult times while also laying the groundwork for a much brighter economic future."

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New PSA Highlights

• Approximately $18.8 billion of the GO and GO-guaranteed liabilities will be reduced to approximately $7.4 billion, resulting in total debt reduction of approximately $11.3 billion;

• The New PSA reduces debt service payments on GO and GO-guaranteed debt by $4.7 billion relative to the February 2020 agreement;

• Newly issued securities will be GO-only, with no inclusion of the COFINA junior lien bonds contemplated within the February 2020 agreement;

• The Commonwealth's maximum annual debt service will be reduced from $1.47 billion to $1.15 billion, with the debt service (excluding existing COFINA senior lien bonds) contemplated in the New Plan representing just 3% of the Commonwealth's Fiscal Year 2021 Budget;

• In an effort to align themselves with Puerto Rico's future growth and demonstrate their long-term commitment to the Commonwealth, creditors will accept part of their recovery consideration in the form of a contingent value instrument ("CVI") that only pays out if a portion of the island's Sales and Use Tax outperforms the projections in the Oversight Board's Certified Fiscal Plan;

• The Commonwealth and its instrumentalities will retain more than $13 billion in cash upon confirmation and consummation of the New PSA, and;

• As of February 21, 2021, the New PSA is supported by holders of more than $11 billion of GO and PBA bond claims.

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About the Ad Hoc Group of Constitutional Debtholders

The Ad Hoc Group of Constitutional Debtholders consists of institutional holders of Puerto Rico's GO and PBA bonds. Morrison and Foerster is serving as legal counsel to the group and Perella Weinberg Partners, LP is serving as its financial advisor.

About the Ad Hoc Group of General Obligation Bondholders

The Ad Hoc Group of General Obligation Bondholders consists of institutional holders of Puerto Rico's GO and PBA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Willkie, Farr & Gallagher LLP, and Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP are serving as the GO Group's legal counsel, with Goldin Associates, LLC, a Teneo company, acting as the GO Group's financial advisor.

About the LCDC

The LCDC consists of institutional holders of Puerto Rico's GO and PBA bonds. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera, LLC are serving as the LCDC's legal counsel, with Miller Buckfire & Co., a Stifel company, acting as the Coalition's financial advisor.

About the QTCB Noteholder Group

The QTCB Group consists of institutional holders of Puerto Rico's GO and PBA bonds. Morgan Lewis & Bockius LLP and Correa Acevedo & Abesada SPC are serving as the QTCB Group's legal counsel, with Ducera Partners LLC, acting as the Group's financial advisor.

Cautionary Statement

This communication and accompanying material are not intended to represent a recommendation or investment advice of any kind. Such content is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational purposes only and, as such, should not be construed as legal or investment advice and/or a legal opinion.

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