CUC bares fiscal conditions

The Commonwealth Utilities Corporation yesterday submitted the comprehensive financial report ordered by the Legislature in light of the ongoing joint inquiry on its $150 million outstanding loan to the Commonwealth Development Authority.

House Committee on Public Utilities, Transportation and Communication Chair Rosiky Camacho disclosed CUC met the deadline set by the Legislature and filed the report late yesterday afternoon.

Mr. Camacho said the utility corporation submitted loads of documents, discussing CUC’s financial status, revenues, losses and other loan agreements it has signed with other financing institutions.

The committee is now reviewing the documents submitted by the utility corporation. The Legislature earlier ordered CUC to submit all needed documents to shed light on allegations of breach of fiduciary responsibilities.

Mr. Camacho said that with the documents, the committee can easily decide whether to retire CUC’s obligations as proposed under House Bill 12- 320.

Under HB 12-320, the indebtedness of CUC from CDA will be transferred to the Department of Finance to relieve the utility company of all obligations to pay accrued interests.

The bill also proposes to provide CUC with credit against such indebtedness for all capital expenditures made from its revenues subsequent to the date of such borrowing from the CDA.

Reports earlier disclosed that CUC has amassed funds to afford across-the-board salary increase, anniversary increases and travel tabs accorded to CUC board members.

CDA earlier this month gave CUC an ultimatum to come up with a plan of action to deal with its $100 million delinquent loan or it may face legal action, which could strip the current Board of Directors the power over the government-controlled power firm.

The mid-April deadline was part of the conditions set by the government’s lending arm in desperate attempts to collect from CUC over $100 million in total loans.

CDA officials said the government’s lending arm is ready to take legal action against CUC if the public power corporation failed to come up with a concrete debt restructuring plan by middle of the month.

CDA is planning to hire a management company which will takeover CUC for the development authority to make the utility corporation a profitable organization.

The Special Representatives Agreement reached between CDA and CUC gives the government-controlled lending agency the power to investigate the utility corporation’s financial management.

The same agreement allows CDA to remove officials who cannot properly operate the utility corporation and relegate the responsibility to CDA’s appointees, according to a legal opinion earlier aired by the lending agency’s counsel Vicente Salas.

According to officials, a CDA takeover of the utility corporation could ensure smoother relationship and guaranteed repayment of CUC’s obligation.

CUC and CDA entered into a loan agreement, stipulating the corporation’s obligation to repay the loans plus interest. Such obligation had been acknowledged by CUC and bargained for by CDA.

In order to resolve the issue, officials earlier explored the possibility of converting CUC’s over $100 million debt to equity primarily because it would also serve the financial books of the utility corporation better than merely transferring its credit from the Commonwealth Development Authority to the executive branch.