The agreement involves the conversion of $45 million of existing CUC long-term debt into preferred stock issued to CDA.
Larry Gawlik of Georgetown said once the Commonwealth Public Utilities Commission approves the agreement, the legal action filed by CDA against CUC will finally end.
“Upon issuance of the preferred stock, CUC’s debt to CDA is forever cancelled inclusive of the outstanding principal and any accumulated interest and late charges under any and all loan agreements, promissory notes or other evidence of indebtedness now existing,” Gawlik said in his seven-page report dated July 27 to Harry M. Boertzel, CPUC hearing examiner.
On May 22, CUC filed a petition requesting the CPUC to approve and order the conversion of CUC’s long-term debt into preferred stock issued to CDA.
The CPUC then asked its consultant, Georgetown, to review the petition.
Alan J. Barak, CUC’s attorney, said they have no objection to Georgetown’s recommendations.
“The conversion is very favorable to CUC,” Gawlik said as it will remove “a significant impediment to [its] ability to borrow.”
At the close of the last fiscal year CUC had approximately $61 million in principal due to CDA and accelerated interest payable on an outstanding principal of $116 million resulting in a total obligation in excess of $177 million.
The reduction in the principal amount from the current $61 million to $45 million is an effective $16 million waiver of previous outstanding loans for sewer and water projects, Gawlik said.
