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Camacho thanks Legislature for supporting CDA in CUC’s debt
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Posted on Dec 23 2008
Oscar C. Camacho, acting chief executive officer for the Commonwealth Development Authority, praised lawmakers for their help in requiring the Commonwealth Utilities Corp. to resolve the outstanding debt it owes the agency.
Public Law 16-17 requires CUC to resolve the longstanding debt owed to CDA. The utility agency owes CDA $177.5 million in principal and interest.
The law states that CUC can issue stock in the amount of $45 million to CDA to write off the debt.
“The Legislature helped us and assisted us in such a big way,” Camacho said.
The two agencies have had legal disputes in the past over the debt.
CUC and the Public Utilities Commission have placed the debt as a priority. By Jan. 16, 2009, CUC must petition the PUC for approval of the stock transaction.
“Even if CDA doesn’t do anything, CUC has to make it happen,” Camacho said. “CUC has to make that preferred stock [transaction happen]. In my opinion they have to sign and not subordinate CDA’s interest.”
During a public hearing earlier this month, consultants hired by PUC said once CUC resolved its debt to CDA the utility agency would go from insolvency to solvency overnight.
Camacho said that during that hearing he spoke with some of the legislators at the meeting, thanking them for their support of CDA.
“I said thank you. Thank you for standing pat,” he said.
However, there have been some snags in the settlement.
CDA legal counsel Ben Santos disclosed during a board of directors meeting that CUC’s legal counsel has concerns about some of the transaction requirements.
According to Santos, CUC has concerns about the preferred stock having priority over CUC’s other creditors. The CDA board of directors wanted the provision in case the utility company acquired loans and extended its assets for security, making CDA subservient, he added.
“It’s very important that CDA has priority over other creditors and CDA has a major say-so on those items,” Santos said.
Santos was planning on continuing discussions with CUC in order to reach an agreement.
