In December 2015, the government of Puerto Rico runs out of cash reserves.
In January 2016, that same government faces a bond repayment of nearly one billion dollars – $945 million, to be exact.
There will be no Chapter 9 bankruptcy protection. The hedge funds made sure of that, by spending $100,000 in Washington, DC to keep HR 870 (the Puerto Rico bankruptcy bill) bottled up in committee.
So how will Puerto Rico meet its $945 million obligation in January 2016, when its central bank (the Government Development Bank) is broke?
Meet MIM…Macquarie Investment Management, an Australian investment bank.
In 2007, under PPD Governor Anibal Acevedo Vila, the government created the “Public-Private Partnerships Authority of Puerto Rico.” These public-private partnerships are also known as “P3s.”
In 2009, the Macquarie Investment Management Group became the “P3 advisor” for the entire island. In 2011, Macquarie was the “financial advisor” for the 35-year P3 concession on the PR-5 and PR-22 highways, with $1.2 billion in project financing.
Now Macquarie will become the broker/dealer for all the P3 projects that are negotiated in Puerto Rico. In 2016 and 2017, these negotiations will multiply – as more bond repayments come due, and more hedge funds demand infrastructure assets in lieu of non-existent cash.
In other words, the hedge funds will control and feed off major pieces of the island: with Macquarie as their enabler.
A record of pure Greed
The record shows that Macquarie is all about…Macquarie.
In 2003, Macquarie assumed management and revenue control of the South Bay Expressway in San Diego, California. But the moment the toll road opened to traffic, the Macquarie shell company filed for bankruptcy, and the US Dept. of Transportation lost $80 million in taxpayer money. The following year, the California state legislature halted its experiment in privatizing highways.
In British Columbia, Macquarie refined another maneuver called “equity flipping.” They invested only 10-15% of their own money into two hospital and two highway projects, borrowed the rest from a bank, then flipped all four P3 projects to other corporate buyers. Macquarie reaped profits of up to 50 percent – on the full value of each deal. One of the hospitals, the Abbotsford Regional Hospital and Cancer Centre, was eventually flipped four times.
A 2007 study of Macquarie’s projects in the US found an abysmal record. None of these projects operated successfully or turned a profit. Two of them went bankrupt. Macquarie’s most substantial US project, the Indiana Toll Road project, was near insolvency and attempting to restructure its loans.
With a history of strategic bankruptcies, equity flips and failed projects, Macquarie is leading Puerto Rico into the brave new world of public-private partnerships. On the other side of the table: dozens of hedge funds, all jockeying for position.
The outlook is clear and undeniable: Puerto Rico is about to be sold off. Union jobs will disappear. The water your children drink, the electricity in your home, the roads you drive on…all of these will be owned by North American billionaires. There will be no P3s on the island, only P5s…Public Private Partnerships for the Plunder of Puerto Rico.
The entire island is just a few months away, from the biggest auction sale in its history.
With the Macquarie Investment group as the auctioneer.