CDA signed a memorandum of agreement on May 7, 2009 with CUC agreeing to turn its debt into nontransferable preferred stock.
Last year, the principal debt ballooned to over $61 million with accrued interest and late charges included.
That same year, CUC issued to CDA 45 shares of preferred stock with a par value of $1 million per share for a total value of $45 million.
Those shares should yield annual dividends with a fixed rate of 2 percent per annum.
“The dividends of the preferred stock are cumulative from and after Oct. 1, 2009 and bear no interest. CDA has taken the position that the value of the preferred stock represents the net present value of the future stream of dividend payments required by CUC and not the face value of the stock itself,” according to CDA’s latest financial statement.
“On Sept. 30, 2009, CDA had recorded an investment of $18,379,266, with a corresponding 100 percent valuation allowance, based on the discounted cash flows of the future dividend payments at 6.27 percent per annum,” it added.
CDA has the option to buy back from CDA $16.2 million worth of stocks.
The debt-equity conversion plan between the two autonomous agencies was reached after the court ruled that CUC owed CDA the money, which included federal funds.
“Dividends are to be paid to CDA beginning Oct. 1, 2012. The agreement cancels and discharges the indebtedness of CUC to CDA amounting to $61,568,750 in principal and $138,670,797 in accrued interest, including related late charges and any other charges owed by CUC on the capital development loans,” CDA’s report further stated.
