CUC wants to borrow $10 million and its general legal counsel Deborah Fisher said the approval of the loan will have a positive impact for the CNMI.
“This loan…is something good for whole CNMI not just for CUC because it would be setting a base line for the whole CNMI that we have credit worthiness,” she said.
In their order, Chairwoman Viola Alepuyo and Commissioner Joaquin Manglona said once House Bill 17-205 becomes law, Georgetown Consulting Group, the commission’s independent consultant, will review the loan.
Introduced by Rep. Stanley T. Torres, Ind.-Saipan, H.B. 17-205 will transfer the authority to review and approve the loan from lawmakers to the commission.
CUC Deputy Executive Director Alan W. Fletcher said they are working closely with the Legislature for the passage of the bill.
CUC is hoping to borrow $10 million loan from Independence Bank of East Greenwich, Rhode Island that will be guaranteed by the U.S. Department of Agriculture.
“We defaulted every loan in the past and that resulted in CUC becoming a high credit risk,” Fisher said.
She said CUC is so desperate to do whatever it can to get the financing “so that our ratepayers will not be burdened….”
Asked how CUC, “with its poor credit and tumultuous management history,” will be able to get the loan, CUC Executive Director Abe Utu Malae mentioned the “four C’s of credit: character, capacity, collateral and capital.”
“It’s character in this case reflected by the quality of the team that was placed in charge of CUC,” he added.
As of yesterday, the commission said the Independence Bank had issued only a “preliminary commitment letter” regarding the proposed loan and USDA had not yet issued a commitment letter regarding its guaranty of the proposed loan.
In its Oct. 25, 2011 report, Georgetown said under current law, the proposed loan transaction, including its terms and conditions, must be approved by law.
The commission has no current authority to approve the loan transaction.
Georgetown said under H.B. 17-205, the authority to review and approved CUC’s borrowing in excess of $500,000 would be transferred from lawmakers to the commission.
However, until the bill is enacted into law, the commission is without authority to approve the proposed loan.
In its April 16, 2011 decision, the commission determined that “external financing is essential to CUC’s ability to meet the requirements of the stipulated orders in a timely manner.”
