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CUC official proposes debt write-off for NMI govt
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Posted on Jan 12 2005
A Commonwealth Utilities Corp. official has proposed an exchange deal that he believes will bring a win-win solution to the dispute between CUC and the CNMI government.
CUC board member Joe Torres is asking the Legislature to pass a law that would allow for the Commonwealth Development Authority to write off CUC’s $45-million debt in return for CUC’s writing off of the CNMI government’s estimated $20-million unpaid utility bills.
In an interview, Torres said such an arrangement is the most feasible solution to the ongoing legal battle between CUC and the government, as well as CUC’s own financial troubles.
Citing CUC’s alleged overcharging, the government continues to refuse to pay its unpaid bills which, according to CUC, total $19.6 million as of Nov. 30, 2004.
“Nobody wants to give in and the debts just keep piling up. Only the lawyers are making money out of this dispute. The only long-term solution to this is to clear all debts incurred by involved agencies and start a new era,” Torres said.
He noted that waiving all of CUC’s debts will allow the utility firm to float bonds to cover the firm’s increasing operational costs.
CUC and CDA were involved in litigation relating to $51.6-million loans owed by CUC to CDA.
In an effort to settle their differences, both agencies signed a Nov. 21, 2002 memorandum of agreement. Under the settlement, the parties agreed to grant CDA equity ownership in CUC’s corporation through the issuance of cumulative, non-convertible preferred stock, valued at $45 million, to CDA.
In return, CDA will waive the principal amount of $16 million, the aggregate of all outstanding sewer and water project loans.
CDA will also waive all accrued interest owed by CUC, which amounted to $70.4 million from the beginning of the loan to December 2002. CUC, in return, will waive 50 percent of the CNMI government’s utility billings outstanding as of March 31, 2002, which totaled $10.2 million.
