CPUC is scheduled to meet today and one of the items on its agenda is the approval of the proposed conversion of CUC’s debt to CDA as preferred stock assets in the utilities corporation.
The debt-equity conversion deal also mandates forgiving some of CUC’s principal debt, postponing interest payments and giving CDA a seat on the utilities board.
A board of directors is supposed to govern CUC.
However, the agency has been under the governor’s control since May last year.
In the absence of a board, the governor delegated Muna to deal with CUC matters.
“CUC has petitioned the commission for approval of the settlement…. But CDA required that CUC’s board accept the deal. Therefore, it is critical that CUC sign the deal with the authority of a board. My directive…has provided such authority to the executive director,” stated the latest executive order that the governor signed last month to retain control over CUC.
“It also permits him to continue to run CUC, providing power, water and wastewater services, until the remaining members of a board can be identified confirmed and convened for business,” the governor added.
Last May, CDA, CUC and the governor signed the debt-equity conversion agreement.
The move essentially makes CUC debt-free and will allow it to raise fresh capital amid plans to privatize its power division.
The debt-equity conversion agreement is in line with the mandates of Public Law 16-17 requiring CUC to issue CDA shares of cumulative, non-convertible and non-transferable preferred stocks valued at $45 million.
CDA’s preferred stocks total 45 shares valued at $1 million each with guaranteed fixed annual rate of 2 percent per annum or about $900,000.
The agency, however, will only start getting its annual dividends starting fiscal year 2012.
CUC has the option to buy back up to $16.2 million of CDA’s $45 million preferred stocks at the corporation through “dollar for dollar” offset against CUC’s future internally funded capital improvement projects.
