In a document obtained by Variety, CDA gave the following reasons for the MOA’s suspension: the delay in the submission of updated financial documents from CUC, the valuation of CUC’s assets and schedule on payment of dividends, and the enactment of Public Laws 15-12 and 15-44.
P.L. 15-12 authorized CDA to write-off the principal sum and interest due to it from loans extended to CUC, while P.L. 15-44 amended it to further the rehabilitation and reorganization of CUC.
The CNMI government, the U.S. Department of the Interior, CDA and CUC “negotiated in good faith to create what ultimately became a series of loans” to CUC.
These loans were negotiated by and between CUC and CDA “who had and continue to have, legislatively created charters and bylaws which allowed for the borrowing and lending.”
On Feb. 17, 1988 CDA and CDA executed a loan agreement for $30 million at 7 percent interest for power projects; $16 million at 5 percent for water projects on Jan. 13, 1989; $5.5 million at 7 percent for additional power projects on Jan. 30, 1990; and $10 million was prepared for power projects on Sept. 30, 1988.
As early as 1996, CDA and CUC agreed on a “radical restructuring” of CUC’s debt through the conversion of the debt to preferred stocks, now amounting to approximately $45.5 million.
After 11 years it was felt by CDA that CUC’s problems needed to be resolved and the equity conversion program was the best method. But then, CUC refused to sign the agreement until Nov. 21, 2002.
On Dec. 10, 2002, Public Law 13-35 was enacted to effectuate the terms of the MOA between CDA and CUC, by requiring CDA to waive $16 million of the principal owed and to waive certain specified interest payments.
On the same day, P.L. 13-36 effectuate the terms of MOA between the agencies by authorizing CUC to issues shares of cumulative, non-convertible, non-transferable preferred stock valued at $45 million to CDA, and to provide for the repayment of debt for users fees for electrical consumption by the CNMI government according to the terms of the MOA.
On Jan. 13, 2004, the MOA was amended and executed between the two agencies as a result of the lawsuit filed in 2001 by CDA.
CDA has been sending follow-up letters to CUC on the terms and conditions of the amended MOA.
Additionally, CDA said, financial statements and other documents have been requested, but CUC has failed to provide updates and complete information.
