Under the MOA, CUC will have 10 years to improve its financial status and purchase the stocks.
“It’s a win-win situation because CDA and CUC will not lose anything,” CDA Chairman Pedro Itibus told Variety yesterday, adding that once CUC recovers from its “problems” the buyback may take place sooner than expected.
Itibus said once all details of the proposed MOA are finalized, a presentation will be conducted for CUC officials.
A recently enacted law, P.L. 16-17, allows for the privatization of CUC’s power division, prompting CDA to consider drafting a new MOA.
“[Under that law] we need to have a CUC board in order for us to present our proposal,” Itibus said.
Once CUC’s power division is privatized, CDA wants its assets in the utilities agency liquidated.
“We’re proposing to allow CUC to buy back or re-purchase the $45 million now owned by CDA,” Itibus said.
CDA believes that its proposal is “reasonable, doable and workable” for both agencies.
The $45 million preferred stocks of CUC are listed as CDA’s financial assets.
In Jan. 2004, a MOA regarding these stocks was signed by both parties but was never implemented and is now suspended.
CDA said there was a delay in the submission of CUC’s updated financial documents, the valuation of CUC’s assets and the schedule on payment of dividends.
The enactment of Public Laws 15-12 and 15-44 also prevented the MOU’s implementation.
P.L. 15-12 “authorized” CDA to write-off the principal sum and interest owed by CUC while P.L. 15-44 amended P.L. 15-12 to further the rehabilitation and reorganization of CUC.
