PR Treasury Reports Revenues $76.2 Million Above Estimates

Press Release

Government Development Bank


PUERTO RICO TREASURY REPORTS GENERAL FUND NET REVENUES
TOTALED $1.28 BILLION IN APRIL, $76.2 MILLION ABOVE ESTIMATES

Sales and Use Tax totaled $207.9 million, $87.8 million above April 2015


(San Juan, Puerto Rico) – Treasury Secretary Juan Zaragoza Gómez reported that 
net revenues recorded by the General Fund in April 2016 totaled $1.28 billion, $76.2 
million above revised estimates, and $47.7 million below net revenues in April 2015.

Corporate income taxes were the main revenue driver in April with $409.2 million in 
collections, a year-over-year increase of $32.5 million, or 8.6%, representing 31.9% 
of total revenues for the month, and exceeding revised estimates by $69.7 million. 
A majority of corporate income tax revenues are collected in April, as most corpora-
tions’ returns, as well as the first estimated tax payments for the tax year, are due
in April.

Individual income taxes were another important revenue category with $302 million 
in collections, a $57.4 million year-over-year decrease. One of the reasons for this 
decrease is that collections in April 2015 included $29 million in non-recurring reve-
nues from special laws. April 2016 Sales and Use Tax (“SUT”) revenues totaled 
$207.9 million, $87.8 million above April 2015 receipts. The difference is the result 
of the increase in the state SUT rate to 10.5% from 6% and the 4% tax on designa-
ted business-to-business and professional services (known as B2B).

B2B collections totaled $12.6 million in April. SUT revenues were allocated as foll-
ows: $197.7 million to the General Fund; $9.9 million, or 0.5%, to the Municipal Ad-
ministration Fund; and $270,000 to the Film Industry Fund.

Excise tax categories registered both upward and downward year-over-year chan-
ges. Foreign excise taxes and motor vehicle excise taxes increased by $4.8 million 
and $4 million, respectively,while alcoholic beverages and cigarette excise taxes de-
creased by $1 million and $8.8 million, respectively.

Finally, in April the category known as “Other” registered a $130.8 million decrease. 
This difference is the result of revenues in April 2015 that were non-recurring this 
year. Act 44-2015 allowed the pre-payment of a special tax on certain transactions. 
These transactions included a pre-payment, at a reduced rate of 5%, of taxes on 
corporate dividends for future distributions of accrued benefits and profits. Reven-
ues from prepaid taxes on dividends, which are classified under the category of 
Other, were $111 million in April 2015.

Fiscal year-to-date (July-April) revenues totaled $7.54 billion, a year-over-year incre-
ase of $213.3 million, or 2.9%, $45.7 million above revised estimates, and $238.5
million below estimates included in the original FY 2016 budget. Treasury Secretary 
Zaragoza Gómez noted that based on revenue behavior up to April, estimates inclu-
ded in the revised $9.29 billion budget for FY 2016 are expected to be met.

GDB Creditors Agree To 53% 'Haircut'

Press Release

Government Development Bank


GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO
ANNOUNCES FRAMEWORK OF INDICATIVE TERMS FOR
RESTRUCTURING WITH GDB AD HOC GROUP OF CREDI-
TORS

Creditors Agree on 53% Haircut for Global Restructuring and Forbea-
rance From Exercising Remedies 

Announcement Follows Declaration of Moratorium by Governor on
Obligations of GDB 

GDB Will Pay Interest on May 1 


San Juan, P.R. – The Government Development Bank for Puerto Rico (“GDB”)
announced today that it has negotiated a framework of indicative terms for a
restructuring of GDB bonds with a group of bondholders (known as the “Ad
Hoc Group”) holding approximately $900 million of GDB’s outstanding notes
(the “Old Notes”). The framework includes an understanding with the Ad Hoc
 Group regarding key terms for a restructuring of a portion of GDB’s Old Notes
 held by the group and a path forward to a broader restructuring of all of GDB’s
Old Notes. The agreement on key terms will provide a framework for GDB and
 the Ad Hoc Group to continue negotiations over the coming weeks with a view
 to enter into an agreement in principle that would memorialize in full the terms
 and conditions of the proposed restructuring. As part of the understanding rea-
ched today, the Ad Hoc Group and GDB intend to negotiate related terms over
the next 30 days and forbear from pursuing legal action related to the May 1st
debt service payment during such negotiations.

 The agreed key terms contemplate a two-step restructuring of GDB’s obliga-
tions, in which all holders of the Old Notes (including the Ad Hoc Group) wo-
uld first exchange (an “Interim Exchange”) their current holdings for new notes
at GDB (the “Interim Notes”), to be followed by an exchange of such Interim
Notes as part of a future global restructuring of the Island’s debt that includes
 GDB’s debt (the “Global Restructuring”). As part of the agreed key economic
terms, creditors would agree to haircut of 43.75% of the face amount of their
 Old Notes in the first-step exchange. In addition, as part of the transaction,
 bondholders would agree to the proposed treatment for their notes, in a sec-
ond step exchange as part of a Global Restructuring, that would result in an
agreed haircut of 53% of the face amount of their Old Notes. The agreed fra-
mework of key economic and structural terms for the Interim Exchange and
treatment in the Global Restructuring is set forth more fully in Annex A here-
to. As noted in Annex A, many important terms of the transaction remain sub-
ject to further negotiation between the parties. In addition, the transaction wo-
uld be subject to several conditions, which would need to be met over the co-
ming months before the deal could proceed.

Importantly, the proposed terms of the Interim Exchange require 100% partici-
pation by all bondholders, including, in addition to the Ad Hoc Group, the state-
chartered credit unions in Puerto Rico (or “cooperativas”) and other large insti-
tutional groups on island. As a result, the proposed transaction is being designed
to take into account the varied interests of all its creditors, and GDB and the Co-
mmonwealth plan on continuing discussions with such groups over the coming
weeks to ensure that any agreement in principle reflects their concerns in a debt
restructuring. Similarly, as a comprehensive deal for all GDB stakeholders, the
transaction contemplates providing a path forward to depositors, including by
providing collateral for their deposits, as GDB works through its challenges.

Without federal restructuring legislation, including the tools to bind non-con-
senting creditors, the transaction would be highly unlikely to reach the requi-
red participation levels. In the absence of federal legislation, the GDB would
not be able to complete the deal as proposed, and the Commonwealth as a wh-
ole would not be able to move towards a comprehensive restructuring of the
island’s debt.

The announcement of this framework of indicative terms with the Ad Hoc Gro-
up follows the declaration of the Governor of the Commonwealth of Puerto Ri-
co of a moratorium on debt service obligations of GDB. Consistent with the te-
rms of the Governor’s executive order, GDB intends to pay interest on its bonds
due May 1.

“The agreement on key terms with the GDB Ad Hoc Group is the result of ma-
ny weeks of negotiations and discussions between us and the Ad Hoc Group. We
appreciate the good faith and patience they have shown throughout this process
the work both they and Commonwealth officials have put into ensuring that the
interests of all Commonwealth stakeholders are respected going forward. While
we have many steps to go before we reach a full agreement on a deal and that
deal can be consummated, this agreement represents a vital first step in the Co-
mmonwealth’s path to economic recovery,” said GDB President Melba Acosta
Febo.

“To be very clear, this is but one piece in a complicated process that will require
every Commonwealth creditor to participate. The time necessary to reach even an
agreement on key terms with 1/4 of a single issuer’s bondholders demonstrates
 that, in the absence of federal legislation that gives Puerto Rico the tools it needs,
 the island will be condemned to a quagmire of economic stagnation with no relief,
 for which both 3.5 million American citizens and our creditors will bear the con-
sequences.”