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Friday, April 18, 2014

Two-year extension sought for CHC’s $3M line of credit

From its initial target of just a one-year extension, the Commonwealth Healthcare Corp. is now requesting for a two-year extension on its $3 million line of credit with the Marianas Public Land Trust.

The corporation board affixed its support yesterday to the recommendation of interim CEO Esther Muña.

“We want to ask MPLT to give us an extension of two years instead of the one year [we initially requested]. I also asked the MPLT chairman [Martin Ada] if they could just roll over the payment instead of coming up with $3 million and then give us another $3 million,” said Muña during yesterday’s board meeting.

Based on the existing $3 million line of credit with MPLT, the hospital is due to pay the full principal on March 12 this year. Since the beginning of the loan, the agency only paid the monthly interest of about $17,000.

Muña said yesterday that the corporation has $3 million on hand but there are other obligations they owe vendors that the corporation needs to pay.

“Again, we have the money…it’s just that we’re holding back on it because we need to work on our vendors’ payment,” said Muña.

The interim CEO pointed out that seeking a loan extension is important in order to help the hospital correct the remaining deficiencies identified by the U.S. Centers for Medicare and Medicaid.

CMS has until June 27 this year to decide whether or not to revoke CHC’s Condition of Participation after the hospital failed to address all deficiencies cited by CMS.

“We really need to request an extension because we need the money to still make the corrections for Medicare. Although we’re provided CIP [Capital Improvement Project] money, it doesn’t include everything that we need to repair,” said Muña, citing as example the funding for the HVAC system and new elevators.

Muna disclosed that she is constantly communicating with MPLT and that the extension request is up for deliberation by its board. She said MPLT has asked for financial documents from the corporation.

If the request is approved by the MPLT board, the corporation will be accorded the line of credit for a third year now. However, this may not be an easy decision for MPLT. During previous meetings, members raised some concerns about the needed collateral for the new loan.

CHCC used as collateral in its line of credit the Navy Hill property that was previously assigned to it by the Fitial administration. However, the Inos administration took back the properties and designated them to the Department of Public Lands.

The properties were composed of two parcels of land adjacent to the CHC with total of 38,500 square meters and an estimated value of $1.2 million.

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