The Commonwealth Healthcare Corp. is seeking an extension of another year for its standing $3 million loan with the Marianas Public Land Trust. The loan’s maturity date is next month.
MPLT consultant Bruce MacMillan reported Friday that the corporation, through its acting chief financial officer Cora Ada, informally conveyed this idea in an email last week.
The corporation is due to pay on March 12 the full principal of $3 million it borrowed from MPLT last year. Interest for this line of credit is reportedly being paid monthly in the amount of over $17,000. CHCC has been drawing on this line of credit for two years.
Ada is reportedly seeking a “change of terms” in the existing loan agreement. She now wants the corporation to pay MPLT a monthly payment of the principal and interest, instead of paying a lump sum of $3 million on March 12.
If the MPLT board approves this extension request, the corporation will be accorded the line of credit for a third year now. However, this may not be an easy decision for MPLT, which has some concerns over the needed collaterals for the new loan.
MPLT legal counsel Robert Torres specifically cited the property the corporation used as collateral in the first two years when it got the $3 million line of credit as well as the $1.5 million loan for the hospital’s electronic health record project.
It will be recalled that former governor Benigno Fitial assigned to the CHCC in January 2012 two parcels of land on Navy Hill that the corporation was supposed to lease out. The Inos administration, however, took the properties back in November last year and assigned them to the Department of Public Lands. DPL now handles the two parcels of land adjacent to the CHC with total of 38,500 square meters.
“Now that the Navy Hill property have been transferred back to DPL, I am not so sure if they can pledge it anymore for collateral [for the new loan] and whether DPL will agree or not,” said Torres during Friday night’s board meeting on Capital Hill. He said that using the same property as collateral would require direct dealing with DPL.
Under the original line of credit, CHCC can be provided a line of credit of up to five years depending on its financial capability to satisfy the loan.
MacMillan said he would encourage the corporation to formalize its request for an extension of line of credit. That way, corporation officials can be invited to appear before the MPLT board to answer further questions.
“It would probably be appropriate to invite them to present to the board and see how they’re doing instead of providing automatic blanket approval of their request,” suggested MacMillan.
Saipan Tribune learned that also being used as collateral in the present line of credit is the hospital’s accounts receivables. Under the same agreement, CHCC can make advance payments on the loan, which could save the hospital in interest payments.