Commonwealth Healthcare Corp. CEO Juan N. Babauta disclosed Friday that he wants the loan agreement between the hospital and the Marianas Public Land Trust modified, a proposal that he said will be on the trustees' table for a decision soon.
The corporation was approved early last year a $4.58 million line of credit with MPLT and the principal amount is maturing next month. Included in this loan is the $1.58 million for the electronic health record project, which may be granted federal reimbursement once it proves meaningful use of the system.
Babauta disclosed that a letter was sent to MPLT requesting a traditional line of credit for the hospital, which means a continuation of drawing the $4.58 million until March 2017.
He said the modification of the terms of the loan agreement will reflect a requirement for interest to be paid in accordance with the current loan, but would allow CHCC to repay the principal amount at any time with the balance of the loan due in 2017.
The hospital, he added, would pledge as payment and security any proceeds of a sumptuary tax to pay down the balance of the line of credit with a minimum of 50 percent of the proceed amount. Drawdown was requested with minimum increments of $100,000 in accordance with the terms of the current line of credit.
Babauta reported that his team met on Jan. 18 with the chairman of the MPLT board, which he said remains willing to help the hospital.
“Pursuant to our meeting with MPLT [on Jan. 18], yes, it's still on the table,” responded Babauta when asked by board member Anthony Raho about MPLT's willingness to accommodate the loan.
Raho cited a December letter by MPLT to CHCC which stated in strong language that it will not accommodate the further proposals unless all requirements they asked for are satisfied by the corporation.
One of the major requirements of MPLT, according to Babauta, is the organization's business plan, which he admitted they lack.
“We can't put [together] a business plan.because we're still in the red,” said Babauta, adding that although the CHCC has $3.6 million to pay for the principal amount of the MPLT loan, they cannot decide whether to pay it now due to emergencies that may happen at the hospital.
When asked what will it take to come up with a business plan, Babauta said the corporation would need to hire an expert to do the work. Due to funding constraints, hiring such a professional is not a priority for now.