The Commonwealth Utilities Corp. has finally come around to paying dividends owed to the Commonwealth Development Authority under a $45-million stock transfer in 2009.
Under the deal, which was forged last Friday during a meeting between both camps’ board members, CUC gave CDA a check worth $1.1 million to partially pay the $4.3 million in dividends it owes.
Moving forward, CUC then promised to pay CDA $100,000 a month during a two- to three-year period or until the $4.3 million in owed dividends have been paid off.
“We’re giving them a check today of $1.1 million and then as we move forward under the agreement we’re obligated to pay approximately $270,000 per quarter to CDA,” said CUC legal council James Sirok.
The CUC legal council also delved into the history of the CUC-CDA stock transfer.
“In 2009 a stock transfer agreement was executed because, at the time, there was this substantial amount of money owed by CUC to CDA. Rather than pay the actual cash, it was sort of transferred into a stock, about $45 million a stock. Based on the transfer agreement, dividends had to be paid over the years, but they have not been paid due to financial conditions of the corporation.”
Sirok explained that under the agreement a couple years back; there was a 2 percent dividend payment every year, which is $900,000. However, since the dividends have not been paid since 2010, an immense amount was racked up.
When asked how much money was owed in dividends, Sirok claims that it would approximately be $4.3 million as of Oct. 1 with them paying it off over a two- to three-year period at the rate of a $100,000 a month.
In regards to how the $45 million is going to be paid Sirok said, “We are able to reduce the amount through capital improvement projects, up to $16 million. So that means if we spend money to improve the power plant, for example, whatever that cost we can deduct from the $45 million.”
To obtain funding to afford the dividends, CUC used payments made by the Public School System.
When asked how it feels to start paying back the money they owe Sirok said, “People can now look at us and say, “Okay, we can trust CUC to meet its financial obligations.”
Manuel Sablan, executive director for CDA, was asked how he feels about the agreement. He said, “Tremendous! We have been working on this thing for the longest time and have a lot of appreciation for the CUC board and staff for cooperating. This account has been online for a long time. It’s also the first time they [CUC] made a substantial payment and going forward, we’re anticipating for them to continue making payments.”
In terms of what the money CDA received is going to be used for, Sablan said, “This money is actually for revolving. So when any government agencies involved in public infrastructure come to CDA for a loan, we can lend them some financial assistance.”