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‘CUC needs $40M for power generation infrastructure’
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Posted on Mar 13 2006
The Commonwealth Development Authority said it wants to examine “hard facts” involving the financial transaction of the Commonwealth Utilities Corp. before it can entertain the utility firm’s financing needs totaling $40 million, and debt settlement.
CDA board chair Tom Glenn A. Quitugua said yesterday that based on CUC’s presentation, it would need $40 million for power generation infrastructure.
He said that it has an immediate need for $5 million.
“They are seeking financing to refurbish the generators, but before we go ahead with their requests, we need to see actual figures. We need hard facts. We need to see their financial statements,” said Quitugua.
He said CDA has asked for such reports from CUC years back.
“There are several things we need to look at,” he said.
He said the CUC negotiation team includes consultant Rufu Mafnas, a former comptroller of the utility firm.
He said Mafnas assured CDA that needed reports would be available when the two parties meet again next week.
The CDA board and CUC management began their discussions at the instruction of Lt. Gov. Tim P.Villagomez, who currently has emergency control of CUC.
Villagomez initially pushed for the write-off of CUC’s debt with CDA totaling $45 million.
Quitugua said that, rather than a debt write-off, the board is focusing on the implementation of a 2003 memorandum of agreement with the utility firm, in which the latter is required to issue preferred stocks amounting to the principal amount.
The CDA earlier cited said that CUC’s debt reached over $103 million due to accumulated interests over the past years.
The MOA provides that the outstanding debt shall be satisfied by allowing CDA equity ownership in CUC through the issuance of cumulative, nonconvertible preferred stocks valued at $45.5 million.
Upon the issuance of the stock, as evidenced by stock certificates, the original indebtedness of CUC shall be considered cancelled and discharged, the MOA said.
The CUC is given a three-year grace period to give dividend payments to CDA.
