i
,
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:
In ferticular
, we
Authority
mist
payabject
princi to the provisions whereby the Guam Power
but the Government of Guam is forgiven the payment of interest to the
. The 197
was a business loan to a failing public
utility .
The Secretary of
Interior guaranteed the loan on the authority
given
him by the Onited
States Congress and is liable to the Federal
Financing Bank for the
unpaid principal ard interest. Nonpayment
af interest beyond
December 31, 1980, as proposed by section
303, would leave the
--
~
We have been informed by officials of the Guam Power Authority that,
with the approval by the Public Utility Conmissiaon of two rate-increases, the Guam Power Authority will be able to achieve a 2.0
ratio of income to debt service requirements that would make its
long-term cbligations attractive to the private bond market.
that such a ratio could be maintained, it is anticipated that within
10 years or less the Authority will be able to obtain private financing
amd end its dependence on the Federal guarantee and loan. We understand
that, for this reason, the Guam Power Authority would prefer a l0-year
extension to the 30-year extensim contained in section 303, which
Provides for the amortization of a principal.
:
an
There is ample incentive for the Guam Power Authority to return to the
private market as soon as possible. Theprivate tax free bond rates
ahould be substantially less than comparable Federal rates. ‘Additionally,
Guam Power Authority is very moch interested. in reestablishing its credit
rating in order to reenter the private bond market for expansion financing.
The Administration endorses the idea of a l0-year extension and proposes
that the following language be substituted for the current language of
section 303:
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Bey
m8
errArwe gl
tae aac ae tes
“a
Bees 3032" Sectianr 22 ofthe Organic Act of Guam
> (6§ gent. 3677%48 U.S.C. 1423a), as amended, is hereby
amended by deleting all after the words "Decenber 31,
°
1980.", and substituting the following language:
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