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MPLT declines CUC’s $7.5M loan guarantee proposal
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Posted on Apr 12 2012
By Moneth Deposa
Reporter
Reporter
The Marianas Public Land Trust has declined the Commonwealth Utilities Corp.’s request to serve as its guarantor for a $7.5 million loan it plans to use to fund improvements at Power Plant 4.
MPLT chair Pedro R. Deleon Guerrero informed CUC about its decision in a letter dated April 5.
Saipan Tribune learned that CUC asked MPLT on March 27 to invest in the utilities firm by acting as a guarantor for the sum of $7.5 million at a rate of 2 percent. This loan will be used to meet some requirements of the contract for Power Plant 4.
CUC has an existing contract with independent power producer, Pacific Marine and Industrial Corp., to run power plant 4.
“MPLT declines further consideration of the proposal until such time as CUC obtains the review and approval of the proposed contract/transaction by the Commonwealth Public Utilities Commission,” Deleon Guerrero said in an April 5 letter to CUC chief financial officer Charles Warren.
CUC officials declined to comment on the issue when asked about it yesterday. It was not immediately known where CUC was planning to draw the loan.
In his letter to CUC, Deleon Guerrero said that, while MPLT is aware that nominees to the commission remain pending and one nominee has been rejected by the Senate, it is his view and position that a commission review is appropriate before MPLT considers the matter.
In addition, the MPLT board cannot favorably act on the loan guarantee proposal as the board has set a 30-percent limit of funding to be loaned out for local investments, Deleon Guerrero said in an interview yesterday. With the funding request from the Commonwealth Healthcare Corp., the 30-percent investment cap may reach that limit.
“The funding for the Commonwealth Healthcare Corp. investment may reach that limit in the near future. For these reasons, the prospect of MPLT pursuing the investment may be difficult,” added Deleon Guerrero.
Besides the CHC loan proposal, the MPLT board has also on its table the $235,000 loan proposal of Arctic Circle Air.
The MPLT portfolio is currently valued at $74 million, based on the latest information released.
